That was 1999. Since then, the site's revenues increased to an estimated $7 million in 2003, and Buckmaster, who stands a full foot taller than Newmark at 6'7" when not slouching, has expanded the list to 45 cities in three countries.
On Aug. 14, craigslist announced that eBay (EBAY
) had purchased a 25% stake in the company, a move that pushed many diehard craigslist fans to cry sellout. After all, with its homey informality, spartan design, and no ads, craigslist's cult-like following of 5 million visitors per month call it the anti-eBay. BusinessWeek's Jessi Hempel caught up with Buckmaster recently to discuss eBay, online classifieds, and what makes craigslist so appealing. Edited excerpts from their conversation follow:
Q: What appeals to you about craigslist?
A: I love hearing positive feedback from people who have literally assembled their entire lives on craigslist. They've found their apartments, met their wives, got their jobs, got their dogs or cats, even tapped into their current social scene -- that's virtually an entire life.
Also, right from the get-go, craigslist has run exclusively on open-source software. It has been an important factor of our success. We're riding the wave. All the software keeps getting better every month, and it doesn't cost us a thing.
Q: Where does craigslist's revenue come from?
A: Our exclusive revenue source comes from the fees we charge businesses to post jobs. In the Bay Area, businesses pay $75. This August, we also began charging New York City and Los Angeles employers $25 per posting.
Q: What would you consider your major craigslist contributions?
A: In 1999, craigslist was running on a PC. I took it to a multi-server environment. I took it to a number of other cities. When I came in, there were about a dozen classified categories. There was no search engine and no discussion boards. Every posting was reviewed and posted manually.
I moved the site to a self-service model. I added the flag system, where users are able to flag a potential problem.
Since then, we've gone from a staff of 8 to 14, and our traffic has multiplied by 100. If we're able to repeat that, we'll be running more pages than Amazon (AMZN
), Google (GOOG
), and Yahoo! (YHOO
), with a staff of just 28.
Q: Why has craigslist succeeded when similar business ventures have failed?
A: One thing that people often don't get about us: We're a public service first. Most businesses are conceived as a way of making money. Our primary mindset is philanthropic -- to offer what we see as a public service. On our site you don't see banner adds, text ads, cookies, co-marketing agreements, selling user information to third parties -- all of those nuisances users encounter on majority of sites.
We put up the sites and people use them or don't. The way we make decisions is a function of the user feedback we get.
Q: You mean you guys aren't in this at all for the money?
A: Basically, and that's the ironic part. Throughout the boom time running through the late 1990s into 2000, a lot of people thought we were fools for not cashing in and going public like everyone else. Now 95% or more of those companies are gone, and we've been in the black, since 1999 anyway.
Q: How will your company change now that eBay is a minority stakeholder?
A: Users who have known us over time are fairly confident that our mission and philosophy hasn't changed for nine years, and we don't plan for it to change now.
eBay will strengthen us in two key places. We always warn people there are offshore scammers contacting craigslist posters. With eBay, we hope to be able to do a better job at consumer protection. eBay has the resources to put people behind bars -- in Romania alone, they've put 100 scammers behind bars.
Also, we would like to bring craigslist's services wherever people are requesting them. We get a lot of requests from people internationally -- eBay is relatively sophisticated in that regard.
Q: It has been a couple of weeks since the deal has taken place. Have you gotten started on either of these initiatives?
A: We understand eBay has gotten lots of volunteers who want to come to meetings in San Francisco, which is a far more popular place than San Jose [where eBay is located]. So far, we've had one meeting with those folks, and we exchanged notes on trying to keep illegal scammers off our site.
Q: Why did craigslist sell?
A: A former shareholder was looking to sell and approached eBay independently of us. Shortly after the shareholder talked with eBay, eBay was considerate enough to approach us and let us know they were talking. eBay executives said early on they would have zero interest in getting involved in this way unless we thought it was a good idea.
Q: Have companies tried to buy a share of craigslist in the past?
A: We're approached all the time. That had intensified over the last 12 months, and probably a good portion of that was due to various companies and institutions approaching us about this minority shareholder.
Q: Did you think about buying out the minority shareholder yourself?
A: That would have been our first choice, but our financial means are relatively modest, and we've gotten into a climate again where Internet companies are rising in value.
Q: Unlike craigslist, eBay has a fiduciary responsibility to maximize profit for its shareholders because it's a public company. Do you worry that this will affect your business model?
A: Management has a fiduciary responsibility to its shareholders. That much is true. But there's nothing to say the company needs to maximize profit at the expense of other goals.
Q: Have you ever used eBay to buy or sell anything?
A: I did buy a Mac laptop several years ago. It was a good experience. And of course I've followed lots of quirky human interest stories. I remember back when the boom was starting to turn to the bust, there was a tech dept that auctioned themselves off the highest bidders...