You might not be surprised to hear that Craigslist was started by a man called Craig, full name
Craig Newmark.
You could say this person turned a very small idea into something beyond anything he could
have imagined.
From sending emails to his friends in the city where he lived, his business now covers
70 countries.
That little idea he had to keep email-buddies updated about what’s going on in San Francisco
has turned him into a household name and according to Forbes, has netted him $1.6 billion dollars.
But how exactly did this happen?
According to Forbes, after losing his job Newmark wanted to give something back to the
community.
He had a bit of cash from his severance pay and so wasn’t in any rush to get himself
re-employed.
Instead, he decided to create an email list from his contacts and list a bunch of art
and technology events that were coming up in San Francisco.
He sent that first email on March 1, 1995.
He was aged 43.
In an interview with Inc.com he was asked how many people that first email went to.
His answer was, “10…or 12.”
Newmark was already tech savvy, having worked at IMB as a developer for 17 years.
He understood very well how the internet could quickly connect people, but still, sending
out details of events to friends didn’t seem at the time something that might make
someone incredibly rich.
But it was popular, and Newmark saw a niche.
People liked being informed about what was happening and the internet was far more convenient
than listing and looking at events in newspapers.
A year later he took his idea online as a website and added more categories than art
and tech events.
Craigslist as we know it was born, but much smaller than today of course.
By 1997 it was already very popular, and that caught the attention of investors and other
big names in tech.
But Newmark turned away from people dying to give him money, knowing that he was onto
a good thing and doing it himself would give him full control over his enterprise.
He is humble, too.
“Do not give me too much credit!” he said in a 2016 interview.
He said it was a simple idea and indeed all he wanted to do was give something to the
community.
It just turned out that the community really liked being informed about what was going
on.
He also said he spent time listening to people about what information they wanted to see
first in the email and then on the site.
Another important thing, he said, was creating something without bells and whistles.
Just give the community the information and be done with it.
In his own words he said, “The idea is that people, oftentimes, do not want the fancy
stuff.
They want to get something done and get on with their lives.”
He was right, too.
Craigslist was basic and people were happy with it just the way it was.
It became a hit with people looking for jobs, especially in a city where tech-related positions
were aplenty and people needed a place to look for them.
By 2000, he really knew he was onto to something big and he quit the freelance programming
work he’d been doing and got a team of nine together to work on Craigslist from his apartment
in the city.
One of those people was Jim Buckmaster, hired as Chief Technical Officer.
He would later become Chief Executive Officer and still is today.
This man helped transform the site, making it not just San Francisco-based but covering
cities all around the USA.
He also added a search feature, ways people could add their own posts, a flagging feature,
forums and the very popular “Personals” part of the site.
It can’t be understated how Buckmaster had a massive impact on the popularity of Craigslist,
but Newmark’s vision and humble way of doing business was always pushing the site along.
If you go to the actual Craigslist website and look at how quickly it expanded it’s
nothing short of amazing.
The site basically took the USA by storm, then starting in 2001 it crept into Canada,
and then in 2004 made the trip to England, Ireland and Australia.
It just had to happen, it was what the people wanted.
The downside was that a lot of smaller traditional newspapers were negatively affected by this
meteoric rise as they relied heavily on classified advertising as a source of income.
Over the years many of these media outlets would close their doors, so while Craigslist
was always a helpful thing, it did create some unforeseen negatives in terms of people
having decent places to read news.
But Craigslist was unstoppable, and in 2005 you could find ads from Bangkok to Bangalore
to Beijing to Birmingham to Buenos Aires.
Thereafter for the next few years 100s of cities were added all over the globe.
Newmark was right, people wanted to be connected, they wanted to know what was going on, they
wanted a simple site where they could buy things, meet people, find apartments for rent,
look for jobs, see what’s happening near them.
So, in terms of success what has happened since Newmark sent that first email to ten
or 12 of his buddies?
Right now it’s said Craigslist covers 70 countries and around 570 cities.
It employs only 50 staff and yet according to Alexa is the 116th most visited website
in the world.
As for the current value of the company, conservative estimates tell us about $3 billion, but reading
some sources we hear it could go for as much as $5 billion.
Once source said even ten, but that might be pushing it a bit.
If you look for yearly revenue it’s hard to find a recent number for 2018, but in 2016
we were told the company took in $694 million and netted $500 million.
In a CNBC article, though, written in 2019, one researcher was cited as saying the company
revenue was closer to one billion in 2018.
This is despite some new competition from Facebook Marketplace and the fact that Craigslist
was forced to pull its extremely popular Personal Ads part of the site for reasons we won’t
go into today.
In fact, the AIM Media Group said things have never been so good, stating that it believes
in 2018 Craigslist’ revenue was $1.034 billion, which was a huge increase from 2016.
We might also add that it is thought in 2003 the site was only bringing in $7 million.
All these numbers are guesses because Craigslist doesn’t disclose what it makes.
It doesn’t have to, of course, as it is owned by Newmark and Buckmaster.
Ok, so now to the question.
How does it make all this money?
It’s a question you might have asked yourself, as for the most part it is free to post an
ad and it seems that the site isn’t making any cash from banner ads.
When contacted the two main men in charge wouldn’t even say how the site made money,
but one spokesperson did say, “We don't comment on numbers that are bandied around
by media, analysts or others, and never have.”
Hmm, ok, so how exactly is this cash cow getting milked?
First of all, this is no ordinary business.
In fact, people have often thought it operated for free.
It doesn’t, but we can say for sure the owners aren’t greedy and could have potentially
made many, many more millions.
But as it stands, a lot of the money comes from charging for job postings only in the
USA.
There are other paid categories, too, such as renting properties in certain areas, ticket
sales, cars posted for sale by dealers and even a section for massage that charges.
Forbes tells us these paid-for posts can cost anything from $7 to $75.
A former employee of Craigslist said in the same article that money was rolling in from
these ads, back in the day in San Francisco as much as $40,000 every day just for ads
for renting apartments.
One group tells us that these days about $305 million is made from job postings alone.
It’s just these small markets where Craigslist makes all it’s money, and the amazing thing
is, there are very few overheads.
Only 50 staff have to be paid, servers must be paid for, office space and equipment, some
legal bills, perhaps beer and sandwiches at the annual Craigslist Christmas bash, but
there isn’t much else.
“One could argue that Craig Newmark, with his simple-minded stubbornness and refusal
to innovate, made himself billions,” said one expert.
Nonetheless, he is said to live a modest life, still contributes to various charities, and
has started to put money back into journalism, something he has disrupted.
This self-described “full-on nerd” has said in interviews he still believes he is
doing some good in society, it’s just doing good has been good for him, too.
He has helped empower people to vote, worked to improve women’s rights, helped veterans,
and donated money all over the place.
When he’s not having meetings and doing work stuff, he said he enjoys listening to
podcasts and reading fiction, as well as watching TV with his wife.
“By monetizing Craigslist the way I did in 1999, I probably gave away already 90%
or more of my potential net worth,” he said in another interview.
He added, “The rationale is that if you’re a small businessman trying to put food on
the table, I’d like you to keep the 100 bucks or whatever for a classified rather
than me taking it and maybe giving back someday a buck.”
Well, he didn’t need to take the 100 bucks from the little guy and it didn’t matter
in terms of how much money he would make.
He still made enough by anyone’s standards and he didn’t have to change the business
model as the company was his.
As for the 1.6 billion he is said to be worth, he has said on record that this figure is
a huge overestimation.
He said he’s worth more in the region of $400 million, and also said the site revenue
isn’t as much as some so-called experts say.
Saying that, when other media has reached out to him to talk about money he has declined
to comment.
Do you believe him or the experts talking about him, that is the question?
He maintains it has never just been about the cash, once telling a crowd at an event.
“I am committed to customer service for the rest of my life.
Death is my exit strategy.”
How much do you think he is worth?
How much does Craigslist make in your opinion?
Also, be sure to check out our other show Who Owns The Internet?
Thanks for watching, and as always, don’t forget to like, share and subscribe.
See you next time.