Gary Wolf wrote a Wired cover story about Craigslist called “Why Craigslist Is Such A Mess”. It’s a somewhat strange article because it is highly critical of Craigslist’s design, management, and lack of innovation. But you cannot read that article and not come away impressed with Craig Newmark, Jim Buckmaster, and the ethos of Craigslist.
Here are some stats I pulled from the piece:
This site not only beats its competitors—Monster, CareerBuilder, Yahoo’s HotJobs—but garners more traffic than all of them combined
With more than 47 million unique users every month in the US alone—nearly a fifth of the nation’s adult population—it is the most important community site going and yet the most underdeveloped
One recent report, from a consulting firm that counted the paid ads, estimates that revenue could top $100 million in 2009. Should Craigslist ever be sold, the price likely would run into the billions
Craigslist gets more traffic than either eBay or Amazon.com. eBay has more than 16,000 employees. Amazon has more than 20,000. Craigslist has 30
Only programmers, customer service reps, and accounting staff work at Craigslist. There is no business development, no human resources, no sales. As a result, there are no meetings.
Craigslist has done this by doing very little. As Gary points out, the service’s interface has not changed in a very long time, if at all. The company has no marketers. To quote Gary again, “By eliminating marketing, sales, and business development, Craigslist’s programmers have cut out all the cushioning layers that separate them from the users they serve.”
I do not believe we should criticise a company that operates like this. We should learn from it. Of all the Internet companies out there, the one that serves as the most iconic for our firm is Craigslist, not Google. We dream of funding a company that can be worth a billion dollars with only 30 employees. We’ve never done it and I don’t know if we ever will. But we are going to try again and again and again.
My partner Brad wrote a post on the USV blog recently about the freeconomics debate and he ended with this observation.
The much more interesting conversation is about the appropriate economic model for a social network that depends on the contributions of its participants and increases in value as more people use it. One possibility is that the economic models of these networks will look more like Craigslist than Yahoo. Recent estimates peg Craigslist’s revenue at more than $100,000,000. Not much compared to Yahoo’s billions, but Craigslist still employs only 28 people. Even allowing for substantial bandwidth, and server costs, it is still hard to imagine how their costs are more than $5,000,000. Since Craigslist collapsed a multibillion dollar classified advertising business into a fabulously profitable $100,000,000 business, perhaps we should be talking about the potential deflationary impact of more “zero billion dollar” businesses. As the radical efficiencies of the web seep into more sectors of the economy, and participants in social networks exchange attention instead of dollars, will governments at all levels need to make do with less tax revenue? That’s a scary thought in an era of high deficits unless traditional governments can learn from the efficent governance systems of social networks and provide more for less.
And of course, that is exactly Craig’s point:
“People are good and trustworthy and generally just concerned with getting through the day,” Newmark says. If most people are good and their needs are simple, all you have to do to serve them well is build a minimal infrastructure allowing them to get together and work things out for themselves. Any additional features are almost certainly superfluous and could even be damaging.
A system like Craigslist does result in a lot spam, fraud, and abuse. But it is also certainly the most efficient and cost effective way to make a market. We should all be studying this system, understanding why it works so well, and how we can replicate it on our businesses, institutions, and governments. I think we have no other choice.
Fred Wilson is a partner at Union Square Ventures. He writes the influential
, where this post was originally published.
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