WSJ on CraigsList and Zen of Classified Ads

prostoalex writes "Wall Street Journal profiles one of the Valley's most mysterious and secretive Web companies. A leader in online classifieds space and by some measures one of Web's top sites, CraigsList is ostensibly anti-ad and anti-self-promotion. From the article: "One industry analyst has estimated that Craigslist could generate 20 times that $25 million just by posting a couple of ads on each of its pages. If the estimate is to be believed, that's half a billion dollars a year being left on the table. What kind of company turns up its nose at $500 million?""

Points from TFA

[Odonian]

So to paraphrase Jim Buckmaster (Craigslist CEO): The company has 21 employees and has been profitable since 1999. They have no venture capitalists or stock holders so they are beholden to no one. Their policy is to only implement things users want. Users don't want banner ads. They aren't above charging commerical interests who use the site for profit, such as real estate brokers.

And that's pretty much it. The guy is happy and making enough money as-is, apparently.

Re:Is that money they turned down for real?

[Sparr0]

They do not suggest charging money for the ads currently on craiglist. What is suggested is allowing companies to place an ad (textual, banner, or otherwise, who knows) at the top of all the different pages, which get tens of millions of views per day.

Re:Hey! We were gonna milk that for all its worth!

[fm6]

What kind of company turns up its nose at $500 million?

The kind of company that companies which wouldn't turn up their noses at $500 million doesn't want you to believe exists.

And in fact they pretty much don't exist. Craigslist was founded by one guy, Craig Newmark, entirely with his own money. He still owns most of the company, except for one small chunk that he gave away, and that later was sold to eBay.

Craigslist is the exception that proves the rule. Consider the following facts:

• Craigslist has no investors or debtors to satisfy.
• Craigslist has lucked into a large and loyal customer base built entirely on word-of-mouth..
• Craigslist costs very little to keep running.
• Craigslist has goals set entirely by one individual who has no desire to make more money than he needs to live off of.

If any of these factors didn't apply, Craigslist would be just another company that would be utterly incapable of turning its back on that half-gigabuck. And yet each of these factors is extremely rare.

I actually find Craigslist's money policies a little short-sighted. Not that I'm entirely against them providing free ads. It's nice that you can post your resume, or sell your couch, or ask somebody to come and fix your computer, and you don't have to pay. A lot of the people who use these services couldn't afford to use them if they weren't free.

But why should all the people dealing in real estate get a free ride? I don't mean people who just want to split their rent with a roommie. I'm talking wealthly landlords [craigslist.org] and folks selling million-dollar homes [craigslist.org]. Who benefit not just from the fact that Craigslist is free, but the fact that the housing search software is well-designed. They should pay. If Mister Newmark doesn't want the money, there are plenty of worthy causes.

Re:...Costco?

[sadr]

CostCo pays their employees very well for retail and treats their suppliers with respect. In return, their suppliers try hard to keep them as a customer, and CostCo's "shrinkage" (i.e. mostly employee theft) is the lowest in the industry.

Their profits are essentially the annual membership fee. Once you've paid that, you're buying everything pretty much at cost (including those higher salaries.)

They do not advertise and dispense with most of the corporate BS. Which means the customer doesn't have to pay for all of that overhead either.

Re:Hey! We were gonna milk that for all its worth!

[funfail]

Did you read TFA? They charge for real estate in NY. Granted, they made that decision because of spam, but not all ads are free.

Re:A company...

[kcb93x]

As listed here: http://www.craigslist.org/about/help/post-fees.htm l [craigslist.org]

"All posts are free, except for:
-job listings in New York City, Los Angeles, and the S.F Bay Area
-brokered housing posts in New York City"

Returns

[phorm]

I've heard numerous complaints about most of the places around here in relation to returns (Future Shop, Radio Shack, London Drugs, etc). In particular, I've yet to see somebody manage to return a digital camera that has decided to die an untimely death...even with warranty

However, with Costco, you bring in your item and you get a replacement. Sometimes even when the warranty has already passed. For that reason I highly recommend them for such things as digital cameras, etc, simply because when it comes to returns, they don't treat customers like potential cons.

Re:Hey! We were gonna milk that for all its worth!

[blackmonday]

"He still owns most of the company, except for one small chunk that he gave away, and that later was sold to eBay."

Actually, ebay owns 25% of Craigslist [cnn.com].

Re:...Costco?

[mrbooze]

Costco is generally considered to be a "model company" in how it treats its employees and customers.

There's a couple of not-necessarily-unbiased articles about it (both seem to take a WALMART BAD! COSTCO GOOD! spin, which while I probably agree with it, is pretty definitely a spin):
http://reclaimdemocracy.org/articles_2004/costco_e mployee_benefits_walmart.html [reclaimdemocracy.org]
http://www.seattleweekly.com/news/0450/041215_news _costco.php [seattleweekly.com]

Also, someone mentioned Costco sells items at their cost and only makes a profit on memberships. That does not appear to be accurate:

"Costco caps its profit margin on most products at 14% and allows itself slightly higher margins only on its Kirkland Signature store brand (a name derived from its previous headquarters in Kirkland) with a strict 15% profit limit."

(From the Costco page at Wikipedia, with a reference to a source article.)

Re:Hey! We were gonna milk that for all its worth!

[mOdQuArK!]

Don't have a cite, but I vaguely remember reading that while each individual large business has much more of an economic effect than any individual small business, the sum total of all economic effect generated by all small businesses is significantly more than the sum total of all economic effect generated by all "large" businesses (subject to your definitions of small & large, of course).

A society could do a lot worse than have economic policies which favored small businesses, and to ignore the desires of large businesses. You'd tend to end up with a highly-competitive & agile marketplace, but where no individual actor (aside from the government of course) is likely to be big enough to cause significant damage to the society even if they wanted to.

Re:Hey! We were gonna milk that for all its worth!

[DragonWriter]

Sole Proprietorships make make up the majority of businesses, but, if you look at it in terms of revenue, I think you will find the largest businesses make most of the money, and have the greatest economic impact.

Last I heard, the vast majority of all jobs were in small businesses, not big business.

Am I a multi-millionaire?

[cnewmark]

That would be nice, I could afford a hummingbird feeder that hummingbirds really like.

Craig

People Queue For Wal-Mart, Too

[patio11]

Yeah yeah, I know, rah rah Costco you-have-a-corporate-conscience-so-I-can-feel-good -giving-you-money and all that, but WalMart is not nearly as bad a place to work as people make it out to be. Granted, its probably not going to appeal that much to somebody who reads Slashdot, but people beat a path to their door when they open a new store:

When one opened in a not-so-great neighborhood in Chicago, they got 25,000 applications (!) for 325 jobs. (http://www.suntimes.com/output/news/cst-nws-walma rt26.html)

In New Jersey, 8,000 applicants for 350 jobs. (http://www.nysun.com/article/34316)

In Oakland, 11,000 for 400. (http://www.sfgate.com/cgi-bin/article.cgi?file=/c /a/2005/08/17/MNGDPE91AH1.DTL)

I think we got many complaints about them

[cnewmark]

If I recall, too many scams. (I'm not sure, since others in customer service handle those; my focus is on NYC apartment brokers, light forums moderation, spamvertising, stuff like that.)

Sometimes, we have to make awkward decisions, based on feedback, but most decisions are subject to future revision.

You can ask more, here, or email [e-mail]

Re:People Queue For Wal-Mart, Too

[CommieOverlord]

There's a world of difference between a company people want to work for because it pays well and treats its employees with respect, and a company people need to work for because there's no other choice for work.