Craig Newmark, the man who founded Craigslist, daydreams about going "middle-aged crazy" someday. That's his way of saying he might trade...
Craig Newmark, the man who founded Craigslist, daydreams about going “middle-aged crazy” someday.
That’s his way of saying he might trade his environmentally correct Toyota Prius for a flashy, expensive car. He might buy an apartment in the East Village so he could live in New York when he’s not in his modest two-bedroom in San Francisco.
And, if he were like virtually every other Internet entrepreneur whose Web site has garnered massive traffic, the 52-year-old self-professed nerd might sell or leverage his stake in immensely popular Craigslist.org for tens or hundreds of millions of dollars. After all, eBay’s founder, Pierre Omidyar, is on the Forbes 400 list with a fortune estimated at $10.4 billion.
But Craigslist is not for sale. And that’s what makes the story of Craig Newmark one of those rare sights: a successful American innovator who chooses not to cash in. Imagine spending the night winning big at poker and then leaving the table without taking the money.
“How much money does one need to make?” asks Newmark, who acknowledges that Craigslist regularly spurns big buyout offers. He’s much more comfortable talking about the “mission” of Craigslist, a Web site with a fanatic following that plays matchmaker for roommates, job seekers and lovers. Newmark connects the mission to the social outcast role he played at his high school in Morristown, N.J., where he sported a pocket protector and thick black glasses taped together.
Now, at 52, Newmark is a short, mostly bald man with a wispy goatee who compares his looks to those of “Seinfeld” character George, played by Jason Alexander, and has developed a Georgelike riff of self-deprecation that he uses in speeches and interviews.
A “Seinfeld” character
“This works to my advantage, remembering my inner nerd,” he says in an interview. “The one thing you learn as a nerd is how it feels to be left out. Craigslist and the Internet need to be about including people.”
Newmark and the chief executive he recruited, Jim Buckmaster, say their model isn’t the Andrew Carnegie one — to ruthlessly maximize revenue, then give much of the takings to charity. Instead, by giving away listings, they say they’re doing good while doing business. eBay bought 25 percent of Craigslist from a former employee last year, but Newmark says that didn’t change things.
Working for Charles Schwab as a computer “system security architect” in the mid-1990s in San Francisco, Newmark began sending e-mails to friends about arts and technology events. The dot-com boom was driving an apartment shortage in San Francisco, and he started to post apartment listings. Morphing into an unadorned Web site, Craigslist became a marketplace for San Francisco.
In less than 10 years, it has grown to serve 76 other cities in 12 countries, attracting more than 3 million postings a month. Nielsen/NetRatings ranks it 13th on the top 20 list of general-interest portals and community destinations on the Web. Analysts say it has dried up tens of millions of dollars in ad revenue that had gone to newspapers.
As a business proposition, Craigslist is a bit undernourished. Only 18 people work for the company, including Newmark, whose business card identifies him as “customer service rep & founder.”
Newmark confirms estimates that Craigslist makes $7 million to $10 million a year in revenue — by charging for job listings in New York, San Francisco and Los Angeles — but won’t say if Fortune was right in reporting last year that he’s paid about $200,000 a year.
In New York, Craigslist has caught on as a way to rent apartments, but its very success has brought problems. To upgrade the quality of the listings, he’s planning to start charging for apartment-for-rent postings — but only in New York, where brokers have unique sway in rentals.
Apartment broker Philip Kiracofe, at Prudential Douglas Elliman, says Craigslist has a “tremendous buzz factor” and generates lots of response. “What Craigslist satisfies is the ability to post information very quickly and in a nonregulated fashion,” he says, pointing out that there’s a downside to that — for example, some brokers try to hide their fees from prospective renters.
Judy Miszner, publisher of the Village Voice, says Craigslist cut into the Voice’s classified-ad base and that of all the New York papers, including The New York Times and Newsday. But she said that its free, unmonitored listings don’t give the industry the quality of response from apartment seekers that the Voice’s newly relaunched Web site provides.
She welcomes the competition as good for the market, though she adds, “It’s quite noble to say we’re not doing this for the money, but there’s a fair profit margin there.”
She’s not kidding. Even if it pays its workers an average of $125,000 a year in pay and benefits and spends an equal amount on computer hardware and other overhead, Craigslist could easily make 50 cents or more in profit for every dollar it takes in, far above the margin in most industries.
Whether Newmark himself ever uses one of the apartment listings to find a place in New York is hard to predict. But he says that he’s never used Craigslist to find love, even though his site carries more than 50,000 listings in its uninhibited personals section, just in San Francisco alone.
“I’ve always felt very hesitant to put a personal up,” he says. “I feel it’s like a conflict of interest.” Anyway, he adds, “I’m involved with someone now and I’m quite happy with that situation.”
He didn’t meet her online, but rather at his regular hangout, a coffeehouse in San Francisco’s Cole Valley neighborhood. It’s named Reverie, which is another way of saying daydream.
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