craigslist > about > press > leave millions

from New York Times, September 6, 2004

Craig's To-Do List: Leave Millions on the Table


By: Matt Richtel

SAN FRANCISCO -- When they write the history of the greatest Silicon Valley entrepreneur that never was, they should remember to mention his pedometer.

If anything symbolizes the efforts of Craig Newmark, founder and keeper of Craigslist (www.craigslist.org), a Web site used each month by millions of people to exchange goods, services and points of view, it is the gadget that measures how many steps he takes each day. It was given to Mr. Newmark by his nutritionist.

''She says I'm not walking enough,'' Mr. Newmark said.

No wonder. He does not get out much. It has been four years since Mr. Newmark, 51, took a day off from sitting at his computer admonishing spammers, scammers, ne'er-do-wells, meanies and others who would demean or pollute the community that bears his name.

It is a tribute to the success of his efforts that the auction giant eBay bought a 25 percent stake in Craigslist.org for an undisclosed sum last month. On its face, the purchase poses a challenge for Mr. Newmark, a man committed to a goal most entrepreneurs would revile: he has steadfastly avoided maximizing his commercial success.

That is not to say Craigslist has been a financial disaster. Far from it. Jim Buckmaster, the chief executive of Craigslist and Mr. Newmark's right- and left-hand man, said the company's revenues approach $10 million a year, although he declined to offer more specific numbers. And the partnership with eBay, a very profitable Internet company, raises the question of whether the site's grass-roots values are at risk. Could Mr. Newmark be on the road to taking his list to the bank?

Sitting at his desk last week, Mr. Newmark said the reverse was true. He said he hoped to make his online community more accessible by using expertise from eBay to cope with increasingly sophisticated attacks from spammers and hackers.

For its part, eBay said it would like to own a piece of Craigslist as a way of learning more about the site's efficient, albeit free, classified advertising system. A spokesman for eBay, Hani Durzy, said the company might ultimately pursue a classified advertising effort, basing it in part on what it learns from Craigslist.

The foremost lesson would be about community and how to sustain one online. Craigslist started in 1995 as an e-mail newsletter that Mr. Newmark sent to friends informing them of San Francisco cultural events. As interest grew, the newsletter became an online flea and job market and an essential community bulletin board.

As investor-backed Internet companies began to surge in the late 1990's, Craigslist remained the tortoise. When the dot-coms fizzled, Craigslist was celebrated as an antidot-com, achieving -- despite its lack of business plans, profit projections and tchotchkes with logos -- the kind of mass acceptance that high-tech investors clawed for.

When the bubble burst, Craigslist was left standing -- a low-maintenance community site used by, among many others, former dot-com workers looking for jobs.

Safa Rashtchy, an Internet commerce analyst with Piper Jaffray, said that Craigslist was ''a household name in the Bay Area.'' That is particularly the case among those in their 20's and 30's, who came of age with Craigslist and seem to make it as central to their lives as yoga, bottled mineral water and instant messaging.

Operated from a rented apartment in the Sunset District of San Francisco, Craigslist has grown into a web of dozens of community-based sites. The sites look essentially the same but their substance is particular to the cities or regions where their participants live.

Craigslist.org accepts no banner advertising. It posts no pop-up ads, requires no visitor registration and charges no fees, except to employers posting job offers. But people involved in several proposed deals said it could be worth $100 million if Mr. Newmark decided to sell to the highest bidder.

Mr. Newmark said that eBay had agreed to stay out of management decisions and would not try to influence him to make a greater profit. EBay's one-quarter stake was acquired from an existing minority shareholder in Craigslist, meaning that Mr. Newmark and his executive team still hold the most influential position.

''They've offered to help deal with some abuse situations -- like offshore scammers,'' he said. He said his overriding goal would remain the same. ''I just want to provide the same kind of customer service that I'd appreciate in other companies.''

It is a situation with which eBay seems entirely comfortable.

''Craigslist will continue to be run by the people who run it,'' Mr. Durzy of eBay said.

But eBay's interest does turn a spotlight on Mr. Newmark, a New Jersey native who describes himself as a hyper-shy nerd. He is the man behind the curtain at a Web site that has outlived and outperformed hundreds of boom-time dot-coms, regardless of how well financed they were.

In all, 57 cities have Craigslist sites, including 3 in Britain and 3 in Canada. Together, the sites attracted more than five million individual visitors in July, who registered more than a billion page views.

Chelsea Pruitt, 18, got a job interview at Peet's Coffee in San Francisco. Tara Marchand, 31, found her apartment and someone to walk Jackson, her yellow Labrador retriever. Gabe Garza, 24, a film student, found actors for a film project. M.J. Norman, 42, likes to glance at the personal ads, because some of them are entertaining.

Janet Chen, an anesthesiology resident at the hospital at the University of California, San Francisco, used Craigslist to find an apartment when she moved from New York last year. When she arrived, she sold an old futon and box springs on Craigslist.

Ms. Chen said that the site was easy and quick to use because it was not heavy with advertising or graphics, and that the people on the site appeared well meaning. The combination, she said, makes for quick transactions -- like the ability to sell something and have it picked up in 20 minutes.

Craigslist has another attribute, Ms. Chen noted: ''It's free.''

That is mostly true. Craigslist does not charge for most postings and transactions on the site. It does charge $75 for employers to post job listings on the San Francisco/Bay Area site, and it charges $25 for employers to post listings in New York and Los Angeles.

Revenues of $10 million might seem to make Craigslist highly lucrative, given that the whole enterprise is operated by a paid staff of 14.

But it pales in comparison to what Mr. Newmark and his operation might be worth on the open market, said Larry Brilliant, a doctor, entrepreneur and member of the Silicon Valley digital elite who ran two public companies and helped found The Well, a seminal online community.

Dr. Brilliant, noting that Craigslist has had buyout offers from numerous major Web sites, said that the secret to its popularity was that it did not strive for profit at every turn. The result, he said, is that the site feels welcoming and authentic -- attributes missing from dozens of profit-maximizing sites that have floundered or failed.

''It was not started with an exit strategy,'' said Howard Rheingold, an author on issues of technology and society and an early member of The Well.

Mr. Newmark does not discuss his compensation. He owns his house in San Francisco. He drives a Toyota gas/electric hybrid. His tastes seem modest -- not that he has much time to spend money.

He said he had a single unmet need. ''I want a permanent parking spot,'' he said. In San Francisco, this is an extreme wish, on the order of asking for a cure for the common cold. ''I'm sort of joking when I say it,'' he added. ''But it's true.''

People who know Mr. Newmark said his endeavor was not without other rewards. He enjoys mild celebrity; he is the kind of guy who people like to say they have met, or see at a party and scream to their friends, ''Dude, check it out. It's Craig! From Craigslist.''

That is a big change for a guy who says he was so nerdy growing up that he never really bothered to develop social skills. There just were not that many people who would want to talk to him or that he would want to talk to, he said.

Mr. Rheingold said the other key to the success of Craigslist was Mr. Newmark's fastidious personal commitment to keeping scammers off the site. ''Craig is obsessively at the door -- like Rick's American Cafe,'' Mr. Rheingold said. Besides, he added, ''It's the ultimate geek thing. Craig gets to answer e-mail all day long.''

E-mail is indeed his gig. He spends all day at his computer in an office he shares with Mr. Buckmaster. The pair work more or less in silence. Mr. Buckmaster handles the business issues and exudes calm and fiscal conservatism.

Mr. Newmark handles the creative neurotic part. He has a kind of condition: obsessive customer-service disorder. He is not totally at peace if there are e-mail messages in his in-box complaining that someone is falsely advertising, defacing or hacking into the site or blanketing various forums or channels with sales spam.

The complaints run the gamut. Lately, Mr. Newmark's pet project is making sure that apartment rental agents in New York do not post in a section reserved for no-fee apartment listings.

''Something smells funny about this one,'' he said of an advertisement for a one-bedroom apartment at 76th Street and Second Avenue. Mr. Newmark sent a note to the poster, asking him to disclose the name of his brokerage agency. Mr. Newmark by no means handles all the concerns himself. In fact, he sees only a fraction of the postings that run afoul of the rules. Most policing is done by the users of Craigslist: if a certain number of users ''flag'' a posting as inappropriate, it is automatically eliminated from the site (the company does not disclose how many flags it takes to remove a posting).

In June, in tribute to Mr. Newmark's dedication and the site's success, the City of San Francisco announced it was creating a Craigslist Day, on Oct. 10. Will Mr. Newmark take the day off to celebrate?

''What does 'day off' mean?'' he said. ''Seriously, I've forgotten how to do that.''

CAPTIONS: Photos: Craig Newmark is the founder and chairman of Craigslist, but his primary job is as its foremost customer-service representative. He is the vigilant overseer of the company's integrity. The business details he leaves to the man seated behind him: Jim Buckmaster, chief executive and programmer. (Photo by Thor Swift for The New York Times)(pg. C1); Jim Buckmaster and Craig Newmark run Craigslist from a modest Bay Area office. (Photo by Thor Swift for The New York Times)(pg. C3)

Chart/Map: ''No Thumbtacks Necessary''

From its humble beginnings as an e-mail newsletter sent to friends in San Francisco, Craigslist has grown to be one of the largest online community bulletin boards, with 48 city sites in the United States and 9 internationally.