In 1995, Craig Newmark started an email list to publicize
events in San Francisco. As "Craig's List" grew
in popularity, he switched from a mailing list to a
website and added categories. Without consciously
realizing it, he was about to take a big bite out of the
classified ad business.
In 1999, Newmark decided it was time to morph
craigslist.org from a hobby into a real business. Jim
Buckmaster joined on as lead programmer and CTO in
early 2000, and was promoted to CEO later that year.
Dedicated to his mission of building a community
on the Internet, Newmark has held fast to his plan to
keep craigslist as free as possible. All listings are free, except help wanted ads in
select cities and broker apartment listings in New York City. There are no
banner ads.
Despite many opportunities to increase revenues, craigslist never compromised
the experience of its users. And because it is able to operate cheaply and
let users do much of the work, craigslist has only about 20 employees--several
orders of magnitude less than other top-ten sites.
Though eBay purchased a 25 percent stake in the company from a former
craigslist employee in 2004, craigslist remains a privately held company. It continues
to expand, and now has sites for over 300 cities worldwide.
Livingston: How did craigslist get started?
Newmark: It's now been over 11 years. I don't know exactly when I started
craigslist. I do know that in '94 I was at Charles Schwab and I was working with
computer security and some other stuff. But my real contribution there was
evangelizing the Internet--telling people that's how the equity brokerage business
would work someday.
247
Craig Newmark
Founder, craigslist
18
CHAPTER
Photo by Gene X. Hwang
I saw a lot of people helping other people out, and I figured, "Well, I should
do something." In early '95--I don't know when--I started sending out notices
about cool events--what I thought were cool events--to friends. It may have
been 10 to 12 people, CC list, using Pine, and that worked out pretty well.
These were usually arts and technology events, like the Anon Salon or Joe's
Digital Diner. More people wanted to be added to the list. They were calling it
"Craig's List." Over time, they suggested other kinds of things, like jobs or stuff
for sale.
In the middle of '95, the CC listing broke and I had to give the thing a formal
name and use a listserv. Somebody offered Majordomo and I was going to
call it "SFEvents," but the people who were calling it craigslist said, "Keep calling
it that. It will signify that it will be personal and quirky." They were right.
That's a microcosm of our whole history: people would suggest things to me,
and then I would figure out what seemed to make sense--what a lot of people
were asking for--and then I'd do it. Even now, with a whole company behind it,
we listen. We do stuff, we follow through, and then we listen more. What we do
is almost 100 percent based on what people ask us to do.
The biggest entrepreneurial lesson I've learned has been that you really do
need to follow your instincts. I trusted some people who my instincts were
telling me were untrustworthy, and in some cases they proved to be very
untrustworthy. But that's fixed now.
I got lucky in that I realized relatively early that I'm not a good manager. Jim
Buckmaster is CEO and he does a great job and that's why my title is currently
"Customer Service Rep and Founder." Sometimes I exploit that George
Costanza magic I have and I act in a glamorous figurehead role, where I'll do
public speaking or whatever. But I spend 40 hours a week or more doing customer
service. I was doing that minutes ago. I'll be doing so again in minutes.
The biggest single project I have now is dealing with misbehaving apartment
brokers--rental brokers in New York City.
The biggest problems are different forms of bait and switch, where they
post an ad for an apartment in the no-fee section, but they actually charge a sizable
fee for renting it. The standard is 15 percent of a year's rent, which can
easily be $3,000 or $4,000. That's a lot of money. So we can handle some forms
of that. The bigger forms will require better forms of reporting, which I'm starting
to think about, but which might not happen until later.
Livingston: Take me back to 1995. Craigslist began as an email list, but at some
point you decided to put it online. How did you program it?
Newmark: Sometime in late '95 I realized that, "Hey, I have a lot of this email
sitting in folders." At this point, I think I'm operating on a Solaris system and
I'm using Pine. I have email in several categories and I can write Perl code,
which turns the email logs into web pages. So I had instant publishing.
Everything has grown since that. I was, in fact, using Pine as my database tool
until late '99, at which point we switched to MySQL.
Through the first years, probably through '98, it was mostly Solaris,
although there was a period of maybe a year with Linux. But we used something
248 Founders at Work
in the UNIX/Linux family all the time. We used Apache relatively early. Perl,
now more mod_perl. And MySQL since '99. Now we're running it on over 120
Linux servers--small, cheap machines. We're primarily Linux on the desktop,
with some Mac and some Windows.
We do worry about liability issues relating to the use of Windows, since it's
pretty insecure. We don't have much sensitive data, but we have to regard
Windows as a source of compromise.
Livingston: When you put craigslist on a website, did you get a positive
response pretty quickly?
Newmark: Our traffic has always been slow but sure. We're the tortoise, not
the hare. Now and then we'll get a surge of growth, but it's been slow but
steady.
Livingston: Were you just running craigslist at night out of your home?
Newmark:It depends on what part of my life it was. But even when I was contracting,
I would work an arrangement with the people I was working for. Now
and then, I would look at my email and get stuff done. I would put in a half
hour. For example, I would be doing my contracting work, I'd get stuff done,
then I would take a half hour off to do craigslist, and then I would get back
to work.
Livingston: This was run out of your apartment?
Newmark: Mostly.
Livingston: Did you need other people's help?
Newmark: At the end of '97, we were getting about one million page views a
month. At that point, Microsoft Sidewalk--or their PR people--approached
me about running banner ads. I had decided to not do them, because they'd
slow the site down and they were kind of dumb. Banner ads are, more often
than not, kind of dumb. More importantly, I thought about my own values and
I was thinking, "Hey, how much money do I need?" I was already doing well as
a contractor. So I figured I would just not do that.
At that point, I got the first inkling of what I now call my "moral compass."
I better understood it later--particularly since the presidential elections,
because then I realized that people were claiming a moral high ground who
actually didn't practice what they preached, and it's about time for people of
goodwill to reassert their idea of what's right and what's wrong.
Livingston: Once you decided that the site was good the way it was and you
didn't need any more money, you stuck to that?
Newmark: Yes, and expanded on it. In the '98/'99 timeframe, we took a good
look at the morality of charging for something. We asked people, "Hey, what do
you think we should charge for, if anything?" And they said, "The principle is:
charge people who would otherwise be paying more money for less effective
ads." They specifically said, "It's cool to charge for job ads and to charge landlords
or apartment brokers." Beyond that, there was some mix of opinion, but
we stuck with that.
Craig Newmark 249
Livingston: Did you come up with the policy on your own?
Newmark: Primarily the community dictated the policy. And they weren't shy
about sending the feedback in. I'm mixing together a couple years worth of
feedback--'98/'99 and beyond, but primarily those years.
In the end of '97, I was approached by some volunteers, and they said,
"Hey, let's run craigslist and see if we can run a nonprofit." To make a long,
painful story short, that effort failed. I kind of knew it was failing, probably midway
through 1998, but I was in denial. A couple of our biggest job posters took
me out for lunch and said, "Hey, this isn't working. Get real and make this more
serious."
It took me a couple months, but I got out of denial, made craigslist into a
real company--got off to an OK start. But again, it wasn't until Jim became
management that we got good.
Livingston: When you say you made it into a real company, do you mean incorporating
it?
Newmark: That was part of it, but the real thing was me going full-time and
getting full-time people in all the areas we needed, including billing, customer
service, technology.
Livingston: So you were still doing contract work while running craigslist?
Newmark:For a few months at the end of '98 through like a month or so of '99,
I actually joined a startup, but left it because I had to get serious about
craigslist.
Livingston: You joined another startup?
Newmark: Remember, in the conventional sense, we were never a startup. In
the conventional sense, a startup is a company, maybe with great ideas, that
becomes a serious corporation. It usually takes serious investment, has a strategy,
and they want to make a lot of money.
We've done something very different. I've stepped away from a huge
amount of money, and I'm following through. In '99, we made this real. I did
make some more mistakes, but by 2000, with Jim handling a lot of stuff, we've
made only the occasional mistake since.
Livingston: Will you tell me about some of those mistakes?
Newmark: Actually, there are legal settlements which prevent me from talking
about a lot of them. I can answer specific questions, sometimes.
Livingston: Did a mistake have to do with personnel?
Newmark:Yes. And I didn't listen to lawyers well enough. And those two issues
are swirled together.
Livingston: So you had some personnel issues that involved lawsuits, but then
you were able to get some closure? Then you hired Jim?
Newmark: No, Jim helped lead us out of the difficulties. I'm being vague, but
I have to.
250 Founders at Work
Livingston: Going back to the time when you were still in your apartment, was
there anything that worried you?
Newmark: I can't think of anything. I may be forgetting a lot, but I think the
only worry I can recall was that, when you run your server on someone else's
machine, if there's a problem in the middle of the night, you have an issue. Or,
if you are running it at a service, and they are flaky and have weak customer
service, that's another problem.
Livingston: Did your site ever go down?
Newmark: I think it did, but in a way that's reasonable and understandable.
Once in a while, our site has problems this way, but the thing is that we still
manage to keep it up pretty well and keep it fast, which is hard because we're in
another surge of growth. We're now getting at least five billion page views a
month. We're in 170 cities.
Livingston: Back to how you got people to help you with this. Did people come
to you?
Newmark:Well, how can they help me run the site? We spoke about making it
a nonprofit and that made some sense, given my ignorance then. Now I realize
there's a lot of legal constraints in nonprofits. They're meant to prevent various
forms of corruption. The thing is, like a lot of laws like that, people who are
crooked always find ways around the laws, and so the constraints just make it
more difficult for the honest people. We are very, very lucky we're not a nonprofit.
We have our own nonprofit, which is doing some really good things. I'm
on the board there, but my gig is customer service.
Livingston: When you first started, did you worry about spammers and other
people trying to take advantage of your site?
Newmark: We have a really good culture of trust on the site--of goodwill. You
know, we're finding that pretty much everyone out there shares, more or less,
the same moral compass as we do and as my personal one. People are good.
There are some bad guys out there, but they are a very tiny minority and
our community is self-policing. People want other people to play fair, and
that works. That does mean a certain amount of our time, including mine, but
that's OK.
Livingston: You set up a way for the community to regulate the site, right?
Newmark: Yes: flagging. Flagging works. By virtue of flagging, we've turned
over control of our site, for the most part, on a day-to-day basis to the people
who use the site. We need to figure out better ways of doing that; that's still in
process.
Livingston: How did you first come up with the idea of flagging?
Newmark: I forget. I think it was my customer service team, not me. I don't
recall, it was so long ago.
Livingston: But it worked pretty well?
Craig Newmark 251
Newmark: Yes. It works great in all sorts of ways, and it's also an expression of
our values. Mutual trust. This is kind of democracy in real life. Everyone wins,
except for the bad guys.
Livingston: Do you remember a time when you wanted to quit?
Newmark: Nothing like that. Sometimes I'll have some anxiety. For example,
when the site is having a problem, or when there's some issue that I'm having
trouble handling, but that's not usual.
Livingston: It started out as a side project. Was there ever a point when you
said, "I don't have the time for this"? Or were you always very committed?
Newmark:Always very committed. I'm stubborn. As I sometimes say, "I'm one
very persistent nerd."
Livingston: I'm surprised that you never had any problems that you thought
were totally overwhelming.
Newmark: The problems I've had which got to me were the after-effects of
some of the bad trust decisions I made.
Livingston: Who did you learn things from?
Newmark:From friends, from business people I know. I should give particular
credit to our principal corporate lawyer, a guy named Ed Wes from Perkins
Coie. He's been very good at a lot of issues. He's really helped us out a great
deal.
Livingston: The turning point for you was when you decided to do craigslist
full-time, when your advertisers took you to lunch?
Newmark: Basically in mid-December of '97, they took me out to lunch and
said, "This isn't working. You've got to take more responsibility for the way
things are going." And I did.
Livingston: And you thought, "This is the right thing for me to do"?
Newmark:Yeah. That meant that I coasted on savings for several months or so,
but that's not a problem. And it worked.
Livingston: Did you fund craigslist initially or did you take outside investment?
Newmark: I funded it with my own time. In no form did we ever take investment
money. While we were trying to run nonprofit, the nonprofit entity took a
few tiny loans, but we're talking about low thousands.
Livingston: I'm interested in the concept of how little money it takes to start
certain types of web-based startups.
Newmark: Good point. The deal is, I did have some help, some favors; but, for
the most part, for the first few years, it was just putting my own time and energy
into it. If I was billing for my own hours, it would have been a great deal of
money. But that doesn't matter now.
Livingston: Who were the first craigslist employees?
Newmark:Just a handful of people that I found in '99.
252 Founders at Work
Livingston: Did you work with them? How did you find them?
Newmark:I think through the site.
Livingston: How did you grow the features on the site? Did you always add
new features based on user feedback?
Newmark: When it comes to features visible from the outside, yes. Internally,
we figure out on a continuous basis... we figure out what tools we need, and
then we do them. That's working to this day, because it's the job, for example, of
customer service to figure out how they can do their jobs better and then to tell
tech what they need. This is business process reengineering, which companies
used to talk about a lot in the late '80s, but usually didn't follow through.
Livingston: Did you have investors knocking at your door, offering you money?
Newmark: They started in '99, and we had a flurry of that last year. That's how
I have some idea of how much I stepped away from.
Livingston: When they first offered you money, were you tempted at all?
Newmark: Yes. But I decided to hold fast. I'm not implicitly judging anyone
else. We're not anti-traditional by any means. We just made a specific decision
based on our specific values and followed through.
Livingston: And you make enough money to cover costs?
Newmark: We are doing well. Again, we are currently charging for less than 1
percent of the site. We started to charge for apartment rental listings in New
York City, but we're still basically free.
Livingston: Did you ever think, "Boy, we can squeeze those brokers for a little
more"?
Newmark: They asked us to charge them, because they feel that it will help
improve the quality of that stuff. Especially the more legitimate brokers--they
want that because they feel that will help control the sleazier brokers. And we
think that will work OK.
Livingston: Are you having an impact on these sleazy brokers?
Newmark:It is working. It's a long slog, but these brokers increasingly behave.
The deal is that a guy without, let's say, a firm moral compass, if he thinks that
other brokers are being sleazy, he feels an implicit moral sanction to be sleazy.
Now I'm telling guys like that, "Hey, it's over." And that's working. So we have
brokers who used to be problematic, who are no longer problematic.
Livingston: Will you tell me about one of the most frustrating situations with a
broker?
Newmark:I'm thinking of one, who's now very well-behaved. They used to do
all sorts of things, all the bad things we've talked about, and they would also do
things to try to evade our tools--which worked, by the way, except I have a volunteer
who looks at things. They would post using multiple email addresses,
that kind of thing. I just kept blocking them and blocking them, and they got
tired of being blocked and they finally approached me and said, "Sorry about
this." And it's working now.
Craig Newmark 253
Livingston: So they didn't just go away; they changed.
Newmark: Yes. That is mighty good. It worked very nicely.
Livingston: Can you remember anything that surprised you about the early
days?
Newmark: What surprises me, in a way, is how almost universally people are
trustworthy and good. There are problems, and sometimes people bicker,
which is a pain in the ass, but people are good. No matter what your religious
background, we share pretty much the same values. There are some minor differences
that we disagree on, but the differences are at the 5 percent level.
That's pretty good.
Livingston: What about companies wanting to buy you?
Newmark: We politely say, "No." The deal is, you know, eBay got that equity.
And we're happy it's eBay since they have a similar moral compass. The person
who sold was a former employee selling his equity. Unfortunately, years ago I
decided I'd give away equity. I would grant it, because that would help me
avoid temptation. Normally I can avoid anything but temptation. But he left the
company, and he decided to sell in 2004.
We are very different from any other startup you've heard about. That's just
the way things happened. It's working out well. Again, a big reason for our
success is Jim.
Livingston: At what point did you think you'd actually be a "real" company?
Newmark:In early '99. It's been 7 years. Jim's been running things for about 6.
Livingston: I read craigslist used to work out of an old Victorian.
Newmark: It's not really a Victorian, I think. It's a very simple home. Oddly
enough, we move into an old Victorian mansion in a not-great location, but
that's all we can find. We did not want to move into the financial district. We
had to move some place convenient for pretty much everyone to commute to.
Livingston: How do you find your employees?
Newmark: We advertise on our site. Sometimes someone will know someone.
Livingston: What's the most important part of your culture?
Newmark: The culture of trust. The moral compass.
Livingston: And you make sure, when you hire someone, that they have one?
Newmark: The other people on my team do, yes. Since I've had such bad luck
in interviewing--that's because I'm not suited to it--I have no role in the hiring
whatsoever.
Livingston: Is there anything about craigslist that people misunderstand?
Newmark: People sometimes still think we're a nonprofit, even though we tell
people that we're not. Sometimes people think that we sold part to eBay, and
that's a misconception I have to fix now and then.
Livingston: eBay is letting you do your thing, right?
254 Founders at Work
Newmark: Yes.
Livingston: What advice would you give to someone thinking about starting a
startup?
Newmark: Trust your instincts and your moral compass. I've used that phrase
too much in this conversation. The deal is: we're not pious about this. We try
hard not to be sanctimonious. This is the way people really live; we just don't
talk about it. I'd prefer to be cynical and not talk about it, and yet, that's real life.