Craigslist's Ongoing Success Story

CEO Jim Buckmaster has an unusual business approach for the popular classified ads site: Keep it simple and don't try to maximize revenue

Craigslist.org CEO Jim Buckmaster has been called many things: anti-establishment, a communist, and a socialistic anarchist. Traditional businesspeople are often confounded by the company's business model. After all, the online classified advertisement site over which he presides consistently ranks among the Internet's most trafficked sites, yet he remains decidedly uninterested in monetization.

A few things you should know about Craigslist. It serves classified ads to 450 cities. The site receives more than 750,000 job listings a month, and users self-publish about 14 million new classifieds a month. Buckmaster confirms the site has been profitable since late 1999, and it generates revenues by charging nominal fees for job posts in seven cities and for broker's apartment listings in New York. No user fees. No banner ads. Analysts estimate the site took in $25 million in revenues last year, but it's clear that that the site could be worth more—very much more.

How has the site created such a dedicated online community? And what has it learned about how to listen to that community? On May 5, Buckmaster sat down with BusinessWeek innovation editor Jessi Hempel for a fireside chat at the Nantucket Conference, an annual gathering of New England venture capitalists and entrepreneurs. Edited excerpts from their conversation follow:

Why aren't you doing more to monetize the site?

We've been told by salespeople that we could bring in many millions of dollars by adding text ads but our users aren't asking us for text ads so we don't have them. Paid search can create a conflict of interest with site search. The better your site search is, the less need there is for paid search.

How have you built such a dedicated community of users?

Something we learned early on is the more we can get out of the way and let users do things for themselves, the less you have to depend on someone in an office. Users are better positioned than staff to serve themselves and help each other. The other thing is following up on feedback. The site has been hammered into shape by millions of requests over 12 years. Everything you see there today is the result of user feedback.

The site looks very much the same as it did in the late 1990s, even as you've added more cities and categories. It's text heavy and kind of boring. Have you ever considered a redesign?

People have suggested that, but they're usually Web designers. You might look to a boring interface as a reassuring thing to cling to as you're looking at some of the outlandish things you see out there. We're open to letting people use HTML in their postings, almost to a fault. People aren't looking for the interface to be exciting. They're looking to it to be fast, reliable, and easy to use.

How do you prevent inappropriate postings from creeping on to the site?

We're approaching 20 million new classifieds per month. The answer [to inappropriate material] has been to let users flag something that's inappropriate. If enough users flag it, it comes down automatically. Inappropriate ads usually come down within a few minutes. It's not perfect, but it's far more effective than a centralized staff could do.

You just had a victory in a lawsuit that has some important implications for free speech on the Web. Can you explain?

A group of attorneys in Chicago filed a suit, trying to take us to task over a small number of postings they thought ran afoul of fair housing laws. Mostly they wouldn't strike you as inappropriate. For example, the mention of a church in an ad was said to be discriminatory to people of a particular faith. That suit was dismissed. The group was attacking the law that insulates online service providers from being held responsible for content posted by users. If there wasn't that law, a lot of sites like MySpace couldn't function.