Unlikely Success in Innovation

By BTM Institute Staff Writer  |  Posted 2008-07-30

When it comes to looking for a job, an apartment, or even a good garage sale, more than 26 million unique visitors each month turn to a Craigslist.com site in one of 450 cities in 50 countries. No one can dispute the cult-like reputation Craigslist, founded by Craig Newmark, has earned. As a company, Craigslist runs pretty frugally, with 25 employees working out of an old Victorian building in San Francisco. However, Craigslist has proven that even a well-meaning, grassroots bunch of nerds can put a big dent in the advertising profits earmarked for 1,000 newspapers. Let's not forget how Craigslist has changed the way many of us live and work.

Craig Newmark has become a leader in the online community by virtue of his efforts at Craigslist over the past 10 years. He's compiled extensive experience evangelizing, leading and building, including work at Bank of America and Charles Schwab. Using a common sense, down-to-earth approach, Craigslist strives to make the Net more personal and authentic, while advocating social responsibility through the promotion of small, nonprofit organizations.

So how did Craigslist, which started as Newmark's idea for a San Francisco events list 12 years ago, come this far? Why would a company that could be making hundreds of millions of dollars each year continue to offer a primarily free service? What drives Craigslist's quirky form of innovation and culture? These are some of the things BTM Institute recently put to Newmark. Here's what he had to say.

Q. What have you learned about the Web?

I've learned more about people than the Web. People are overwhelmingly trustworthy and good. There are few bad guys out there. The problem is that the bad guys make a lot of noise. It sounds like there are more of them than they really are. One reporter says the reason you hear from extremists is that moderates have stuff to do. And that reporter is Jon Stewart.

Q. You folks are a low-budget operation?

Very much so! The deal is that Jim Buckmaster, the fellow who really runs things, makes sure we run lean. I want to point out the important role Jim plays in the company. As a result, we don't owe any venture capitalist firms anything. We have never taken out a loan. We manage to run very well on 25 people, and we do okay.

Q. Craigslist looks like an electronic text-version of the world's largest Penny Shopper. Why are people attracted to it?

On the one hand, we provide a very simple, effective platform for a lot of things. We help people get everyday stuff done. On the other hand, we operate a pretty good culture of trust that has to be paired with good customer service. Also, our site itself is kind of a real expression of some values we all share. I'm talking about stuff such as the notion that you should treat people the way you want to be treated, and you want to give the other person a break. For that matter, everyone has a live-and-let-live attitude, even when we don't do so consciously.

Q. Would you say that's the innovation?

In a strange way, yes. Although we all share those values, the hard part is following through with them. If you want to treat people according to the Golden Rule, then think of the last time you had poor customer service. You can't fix another company's bad customer service. On the other hand, if you can provide good customer service for your own company, then everyone wins.

Q. Is another innovation listening to your constituents' ideas?

This is another way to follow through on treating people like you want to be treated. The deal is that you listen and then do something about it.

Q. Over the years, you received more and more feedback. How did you parse it out?

For example, the fundamental reason for our charging model is people [at Craigslist] slowly asking other people what would be the right way to pay the bills. They told us to charge people who [would] otherwise pay more money for less-effective ads.

Q. You've kept the site pretty plain and simple. Why is that?

Yup! We're all battered by too much media demanding our attention. As an antidote to that, we provide a site that's very simple and gets to the point right away and is fast.

Q. Your site reminds me of the pre-Internet hobbyist bulletin boards and the personal computer-based communication services.

I was influenced by these services, especially the Whole Earth Catalog's The Well.

Q. What's the technology behind Craigslist?

Nothing special! We have a collection of more than 200 servers, all running open source software, particularly Linux, Apache, MySQL and Perl. We wrote our own code, which does content management.

Q. Do you spend a lot of time on enforcement to keep off spammers and people who are going to take advantage of others?

I'm part of a customer service team which does things like that. I'm one of a bunch. That works out pretty well in practice.

Q. You have some ads that are pretty racy. Why do you tolerate them?

You're right. Racy in itself is okay. Racy and illegal! We don't want them on the site. It's wrong. It's not possible for us to look at every ad that goes on the site. We get more than 20 million posts per month. Our first line of defense is the flagging-for-removal mechanism. If you're looking at an ad and feel that it's wrong, you can flag it for removal. If other people agree with you and vote for removal by flagging, the ad is removed automatically. It's a flawed mechanism. Some times we don't get many flags on a particular thing. There's a guy who pointed out that democracy is a lousy form of government, but it's the best we have. That guy isn't writing much any more. He's right. That quote comes from Winston Churchill.

Over the weekend, I went to something sponsored by the News Hour with Jim Lehrer. It was at Colonial Williamsburg at the House of Burgess, where they pretty much wrote the Bill of Rights. I'm still digesting what I learned, which I put on my blog.

Q. What can corporate America learn from you folks?

Basically, they need just to act upon shared values, not to talk about them, but to follow through with them. One can argue that corporate America doesn't do a good job of this.

Q. In Andrew Keen's book, The Cult of the Amateur, he says that you're keeping people in the newspaper industry from earning a living. What do you have to say about this?

He makes an assertion. If he did any fact checking, he would've observed that many regional newspapers are in trouble because they're part of a chain looking for a 30 percent profit margin. You might also have heard that national newspapers and local newspapers are doing very well. The man who runs the Denver Post recently brought up the plight of regional newspapers.

In mid-2006 I was on a panel with Keen at the Personal Democracy Forum. I pointed out that it appeared that he hadn't done any fact checking. He agreed. Therein lies considerable irony, in that he's decrying amateurism, and yet he was a little short of the fact-checking part. He said things like every ad that goes on Craigslist means one ad that doesn't go in a newspaper. We know that is largely false. Most of the ads we get, we hear anecdotally, would never have gone into a newspaper.

In the book, Keen makes a point that a skilled professional can do a better job than a talented amateur. I pointed out that there are many experts who do a consistently bad job. For example, there's Mr. [Donald] Rumsfeld. He certainly didn't work out well. Keen wound up agreeing with me. He pointed out problems with Wikipedia, but he didn't mention that it's self-correcting. While there are problems, they're being fixed.

Q. One of the things that come up with journalism is truth. How do we get at the truth?

Truth is a pretty slippery content under the best of circumstances. I sometimes just prefer honesty and fairness instead of truth. When a big subject comes up, the Internet allows lots and lots of people to dig in. It provides a lot of tools for investigative reporting, whether by professionals or by citizen journalists. Over time we're getting closer and closer to what's going on. Wikipedia is a good example of that. When it comes to accountability by Congress, the Sunlight Foundation is funding the development of a lot of tools for it. I'm part of this foundation.

Q. Are you involved in NewsAssignment.net?

Marginally. I was a supporter of theirs. That's working out pretty well. These things are happening. I do believe in the importance of investigative reporting. That's a really big deal. We need to make that happen more. I decided to use some of my time and a little bit of my money to push these things.

Q. What's the next venture for Craigslist?

More of the same. We have to get better at what we do. For example, we need better tools to detect, to remove and to prevent spam.

Q. What's your view of social media?

It will play a really important role in connecting us all. Right now, I'm not a regular user of any of it.

Q. Are you going to move in the direction of social media?

We have no plan to do it. If our community starts telling us they want it, then we'll seriously consider it.

Q. Is your plan to maintain the status quo or to be acquired?

We want to make incremental improvements based on what people in our community tell us. For example, we quietly introduced multiple language support recently, starting with Spanish. We're still testing it out. We need to develop a better search engine, one that can search more than one city at a time.

Overall, we have no interest in selling.

Q. You sound like you're very content with the way things are going. Don't you want to own a 400-foot yacht?

I don't know what I'd do with a lot of money. I joke about nerd values being making enough to live comfortably and to provide for your future. Once you have achieved this, what's the point in making more?

Q. Do you do anything to give back to the community?

I'm involved in a number of side projects. You've noticed some in journalism and media. I'm also involved in a mass movement of moderates in Palestine and Israel. These do-good people are just ordinary citizens who are just tired of the fighting, and they're telling their leaders to cut a deal. I'm also involved in a number of micro-finance efforts, particularly for the West Bank, which is just beginning right now. I'm trying to accelerate this. Micro-banking began with Muhammad Yunus, founder of Grameen Bank.

Q. What do people say about you that you don't agree with?

I can't think of very much. Some people might have been unkind. I can live with that. When people write that way, they usually discredit themselves. There have been people who've tried to plant disinformation about me. Again, people realize that it's fake.

The BTM Institute (www.btminstitute.org) brings together the academic, corporate, government and thought-leadership communities as a multidisciplinary research think tank to address the need to integrate business and technology.

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