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FT 2006: Craiglist bewilders money-minded executives

Posted: 08/03/06 By: Jemima Kiss
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Craiglist CEO Jim Buckmaster was characteristically laid-back during an interview with Richard Waters, the FT's managing editor for West Coast USA, at the FT digital media and broadcasting conference in London earlier this week.

Dismissing his recent Vallywag accolade of 'second hottest man in Silicon Valley' - "the bar was set very low" - Mr Buckmaster said that he is a Craigslist success story himself; he got the job in 1999 after responding to an advert on the site and was interviewed on Craig Newmark's living room sofa.

"Even when it started we had no idea how big it would get," he told the FT conference.

Once upon a time, news publishers may have said the same thing. But Craigslist has now become something of an obsession for them.

It was started by Craig Newmark in 1995 when he moved to San Francisco, and wanted to email events information to colleagues. Visually unassuming, but clearly organised almost entirely around functionality, its 'radical' proposition that profit is not the objective generates no small amount of bewilderment in the industry. By building a community where anyone can post a classified advert for free, Craigslist sites now generate a staggering 3 billion page views every month and run more classifieds than every US newspaper combined.

No wonder the newspapers are worried.

If publishers were looking to extract business secrets during this interview they were disappointed - and not because of any particular caginess on the part of Mr Buckmaster. The success is down to operating a service for free, built around a model of providing and adapting its services to the requests of its users, rather than seeking to maximise profit: "We're a little unusual," he admitted.

"We've been told that text adverts alone could make $10 million in revenue, but the only thing that would make us change would be if our users started asking for that."

He said newspaper classifieds is still a "very healthy market", but hinted that newspapers have not fully exploited the advantages of the web.

"Classifieds is a huge market and obviously there is room for all styles," he said.

"Newspaper classifieds is still a very healthy market in the US, but it lends itself very well to the web - the immediacy, unlimited length."

Craigslist has yet to make a significant influence in the UK market, but the foundations were laid in 2003 with the London section. There are now sites covering 13 UK cities; Oxford was launched in January this year but it is still too early to tell how successful the model will be here, said Mr Buckmaster.

He envisages that the next stages will be the introduction of more cities, more categories and more service features, but emphasised that enhancements and development of new services is entirely led by reader requests. He also said that they were not concerned about competition from Google Base, the search giant's own classified advertising project because "such a large market won't be consolidated in just a few hands".

The biggest problem for Craiglist is simply keeping up with demand.

"We struggle to keep up. Last year overall growth was 200 per cent, both in terms of page views and listings - and if it pools to 100 per cent, we would be happy with that."

eBay's position as 25 per cent shareholder has led to improved consumer protection on the site. The auction site had shared its expertise in dealing with scammers, which he described as a nuisance rather than a threat to Craigslist's business.

But Mr Buckmaster emphasised the site's non-commercial ethos - signified by its discreet and suitably San Franciso-style peace logo favicon and its .org domain, usually the preserve of charities and not-for-profit organisations.

"We are often asked if we are trying to build an audience and then monetise it," he said.

"Craig was never in it for the money, although we do make good livings. But rather than going for insane riches and having to have bodyguards, we are happy to offer a service that is much loved."

Speaking about the inevitable buyout attempts by big media, he said the site is "in strong hands" and that the ecosystem of the market needs its unique, independent vision.

"Cashing in has never been Craig's ambition and those have all been left by the wayside," he said.

"From an ecological perspective, it's good to have different species out there. We don't want just a monoculture of corporate drones."

• Research by Classified Intelligence in 2004 estimated that Craigslist has drained as much as $65 million out of the classified advertising market. In an interview with journalism.co.uk in November 2005, Craig Newmark contested that claim, saying: "Industry analysts tell me that bigger issues include niche classified papers - like Pennysaver and AutoTrader - and the erosion of trust. We get many adverts that would never be published."