Managing a 45-city Internet-classifieds site with 5 million unique visitors and over 1 billion page views a month was no problem for Craig's List leaders Craig Newmark and Jim Buckmaster. That is, until a rogue shareholder sold a quarter of their company out from underneath them to one of the Internet's largest, most powerful businesses.
After a Fast Company staff member blogged about the news in FC Now, the magazine's team blog, founder Newmark left a comment in response. So Fast Company contacted Newmark and Buckmaster to learn more about what it was like to court Web giant eBay, how customer feedback can drive development, why it's important to demote yourself — and what happens next.
Fast Company: I've read that the 25% stake sold to eBay was originally a gift you gave to a friend. How did you wind up giving away such a large stake in the company?
Craig Newmark: It's in my blog. It sounds complicated, but I figured it would be smart of me to spread the equity around in case I ever got tempted to sell out; I have the same weaknesses that anyone else does. So I gave some to him, figuring that we're all on the same page here — no one's going to sell it — it doesn't have a dollar value. But he sold it.
FC: Are there other people with equal chunks of the company?
Newmark: We're not disclosing that right now. Probably not ever. You get the idea.
FC: Fair enough. You've said that eBay and Craig's List are going to communicate and share ideas. How is that going to happen? Formal meetings? Brainstorming sessions? Over coffee?
Newmark: This may be too simple an answer, but we're just going to talk to the guys. We've started chatting. They are so much more experienced and so have much more muscle dealing with scammers from off shore, like the scam gangs operating out of Nigeria or Romania. They have contacts at some big ISPs that aren't responsive when we report scammers to them.
Jim Buckmaster: Certainly, at this point it's informal. We talked to them for about two months before it was finalized. We talked to people from top to bottom, from Pierre [Omidyar] and Meg [Whitman] on down to lots of rank-and-file folks, just to make sure, on both sides, that this was a relationship that made sense. We talked with them fairly exhaustively, so that may explain why we haven't done much talking since; we're probably all tired of talking to each other. (Laughter) We don't know for sure how it will develop specifically. There will be benefits from both sides. They have expanded into many countries; they're operating successfully in a number of different international regulatory environments, in a number of different languages. Those are all steps that we hope to take, and we hope to learn from their mistakes. They have the resources to go after international scammers. If I understood them correctly, more than 100 Internet scammers have been put behind bars just in Romania because of their efforts. We don't have the resources to go after people to that extent. [Our partnership] will give us the ability to exchange notes about the bad guys.
FC: I know you've been asked this a lot now, but, specifically, what do you think eBay hopes to learn from you?
Buckmaster: We haven't had any formal discussions about it. But for one thing, the two sites are a couple of the largest online communities in the world. Both teams are considered expert at what they do. Of course, the two serve different purposes — but each is a very large community of users who appreciate being able to use a level playing field and get what they need done in a fairly efficient fashion. We do stand out in some areas. Web site performance: Our page-load speed is faster than any other large-scale site by a considerable margin. We're perhaps the best at harnessing open-source technologies for large-scale development. We're masters in efficiency: We're currently serving as many pages as Amazon, but we have 14 employees. We do a lot with a little. And remember, it's a relatively small investment from their standpoint. It's not as though they're counting on us for their future financial performance.
FC: Do you think eBay is sincere about not having commercial interests in Craig's List?
Buckmaster: Um, I don't think commercial interests were a driving force. One of the things we liked about them is that they're very community driven themselves. Craig's List resonated deeply with them. Our desire to stick to our mission and philosophy was one of the things we discussed early on; they wanted to know what the core values were at Craig's List. In their minds, those were sacred cows. I wouldn't be surprised if you saw some linking between the sites somewhere down the road, but no specific plans.
Newmark: [eBay] likes the way we do things. The news is really that there is no news. I just tell people that there's no change. We hope we'll be able to handle abuse cases better, but that's about it. I like the way they track user reputation — if you're looking for a better dry cleaner, the way to find that is to ask around and go by reputation. We've been thinking about adding something like this for years, but we've never had a chance to do anything about it. You listen, you talk to people. Who knows? We'll see. We have no idea what we'd do, if ever. I do think the idea in general is important, but it won't be soon. Right now I've got a personal interest in getting Anchorage going.
FC: Depending on one's perspective, your situation with eBay could be seen as a blessing or a curse. What do you say to someone at another small company who may have a similar opportunity?
Buckmaster: One lesson would be to focus on what's most important to your users and spend the majority of your efforts in focusing on making sure that those important values are preserved in whatever relationships or deals you're contemplating. It's been the Craig's List credo since early on that we're here to provide a public service to our users and that wasn't something that was going to be up for negotiation with anyone. And we were approached by a lot of other entities — certainly eBay stood out from the crowd by understanding intuitively what's important to our users. They seemed to recognize our mission and philosophy, whereas other entities might not have understood that.
FC: Others approached you for the same stake that eBay eventually acquired?
FC: When you made the announcement, what kind of response did you get from the public?
Buckmaster: It was wide-ranging. The majority of our users understand that our mission and philosophy hasn't changed in nine years. It wasn't likely that a minority shareholder was going to lead to noticeable changes in the way we do things. People less familiar with us looked at this with a healthy degree of skepticism.
FC: Were some people excited?
Buckmaster: Quite a few. Of course, it's those who are worried that you're most likely to hear from, but we did get a few folks chiming in to say that this was a positive development.
FC: Did they make any suggestions?
Buckmaster: They were eagerly anticipating our wholesale reform to the eBay site. (Laughter) No, they didn't have any specific ideas. I think some people understood that what this really represents is an upgrade. That we'd found a good home for these shares, and we might even obtain a substantial positive outcome for the Craig's List community. For those less familiar with us, it's only the passage of time that will show that the way we do things won't change. And we think that will lead to a lot of, um, what's the phrase I want? Pleasant surprises. Watch this space.
FC: Craig, you mentioned launching Anchorage. When you launch a new community, what goes into that?
Newmark: A little tech work, but mostly word of mouth. The press has been pretty kind to us, and we appreciate that, but generally it's just word of mouth. Mostly spontaneous, people just tell their friends. We should probably be more professional about it, but it works.
Buckmaster: Adding more cities like Anchorage and making the site as widely available as people will have us is our focus. We get lots of requests for Craig's List in new cities — including cities where English is not the spoken language — so we're trying to gear up for some Craig's List sites in other languages. That would be a significant tech project for us. Another one would be making our service available to folks in more rural areas, away from major cities. And then we want to add whatever features people would like to have. We need to improve our search capabilities. Lots of things that essentially amount to feature enhancements.
FC: Any specific foreign-language cities?
Buckmaster: The one that's requested most frequently is Paris. We get them for lots of different countries. The first foreign language we go into may be Spanish, given that it's the language that will crop up on most frequently in postings. Spanish is very applicable, even in the U.S. And of course there are lots of large cities where Spanish is the primary spoken language.
FC: What about social networking? Have you thought about going into that field?
Buckmaster: I guess we're already there in a very light way. As far as adding technologies like friend-of-a-friend, it's not something that we've looked at closely. In our view, it looks promising, but it's not a mature technology and we're probably going to be content to wait until it's been figured out. We figure it will filter up from the bottom of our site rather than a top-down approach. We'll look to weave it into the Craig's List tapestry in an organic fashion over time rather than in some bold new initiative.
FC: Assuming eBay won't have much to do with the look of the site, how do you decide what gets added? Categories, forums, features — who makes those calls?
Newmark: Usually people ask us for those, either directly by asking for new cities or categories. There's a lot interest in Anchorage right now. And now and then Jim and I will figure stuff out on our own. Here's two examples. Some years ago we added missed connections, out of a sense of the romantic. Because sometimes you meet someone, there's some chemistry, but no one gets the other's phone number. The other example is that we were thinking how single moms never get a break — so that's the reason behind the childcare section. Something moms need a lot is babysitters. The childcare section has taken off really well; I hear a lot from parents who find babysitters that way. Plus, it's taken off to the extent that people have started posting a lot of baby stuff for sale there, so we created a special baby section. In a sense, people asked implicitly for the new section simply by repurposing the original one.
Buckmaster: Our role is to prioritize the feedback that we get from users, since we can't do everything that's suggested to us. We try to figure out which features would have the largest possible impact and which would speak to multiple needs that we're hearing about, and of course which features we can get out the door rapidly. Some of the things requested are obviously more difficult than others. We've gotten to the point where the most difficult thing about adding new categories or new cities is trying to maintain a navigational interface that's not overwhelming. When I first started we had about a dozen categories and we were only in San Francisco. And even though our home page is now a sea of blue hyperlinks, people seem to be able to navigate it just fine. We've striven... is that a word? (Laughter) We've striven to stay compatible with 1995 Web technology. (Laughter) We're not real big on style for the sake of style. A lot of times, style decisions aren't made with the end user in mind; they come out of the marketing department. Not having a marketing department, we don't have to worry about that.
FC: Did eBay have anything to say about that?
Buckmaster: No. The topic didn't even come up. They must not have been repulsed by it. (Laughter) Our site has been described as having the visual impact of a pipe wrench. Our headquarters have been described as either a shabby or dilapidated Victorian. One of the two. Both probably apply. (Laughter)
FC: Well, it's comforting that you haven't upgraded to the gold-plated trash cans.
Buckmaster: Well, we do have new computers. We're not crazy. The majority of team now uses Linux. There are some Macintosh and a few folks on Windows in accounting.
FC: In terms of the way the site evolves, where have you seen users repurposing features?
Newmark: One example was in our "general for sale" category: People posted more and more furniture. After awhile, we caught on and created a furniture section.
FC: And do you catch on because you're watching all the time — or are people bringing it to your attention?
Newmark: Both. We try to keep abreast of things, but given the culture we've developed — where people look out for us as we look out for them — frequently people will spot stuff before we do. For example, that's why we have the flagging system. Somehow, we've built a really good culture of trust and even fairness on the site. And the deal is that since we've found that pretty much everyone is so trustworthy, we've handed over a lot of control over the site to the flagging system — and people flag stuff for removal. Sometimes we'll get repetitive abusers — misbehaving apartment brokers, mostly in New York, but spreading to Boston and Washington — and we're trying to figure out how we can turn over more power to those people who, for some time, have helped us locate the bad guys.
FC: Would that mean giving outsiders access to edit the site themselves?
Newmark: There are people who really like us and who are outraged by people who abuse the site. These folks wouldn't be able to remove stuff on their own, but we could more easily notify us to get things done. It would be much less work for us.
FC: How about removing categories or features — how is that done?
Newmark: I don't think we've removed things. We've modified them — for example, we've added TV to Media, particularly for folks in LA. We observe behavior and we listen to feedback. Sometimes we'll solicit feedback, depending on the situation.
FC: How did Jim become the CEO? What was that like to pass the helm?
Newmark: I realized that sometimes the guy who's good for starting things is not a good guy to lead things beyond startup. So I've surrounded myself with people who are smarter than I am — in a savage corporate takeover, I got rid of myself — and I'm in fact no longer in management. My primary duties timewise are customer service. Instead of just talking about customer service, we obsess about that.
Buckmaster: I originally came in as a lead programmer type, and that's how I spent the first eight months or so. Then I started getting involved in some other aspects. I think it was becoming clear to Craig that he wasn't interested in doing a lot of the management-oriented things that were becoming more necessary. So it was an organic process, as many of ours are.
FC: And Craig, has Jim taken the company in the same directions you would have?
Newmark: Identical, but smarter. Jim has helped us get a lot of stuff under our control. We're a leaner, more effective organization. We were wasting a lot of time and money before — and now things are much tighter.
FC: There was a Craig's List movie made — and Amy Blair has "The Week in Craig." Has Craig's List popped up anywhere else that I'm not aware of?
Newmark: (Laughter) The movie is done. The guy is shopping it to distributors, there've been a number of screenings, and it looks real good. But it's not really about us. It's about the people who use the site. The director pursued a whole lot of people — took something like 120 hours of footage — and distilled it down to about an hour and a half. He arranged it with us ahead of time; we worked with him to do it right, to respect everyone's privacy.
FC: And how about "The Week in Craig"?
Newmark: Amy does that independently, and I really like it even though it can be kind of cruel. She's asked me for a little help doing a less-cruel version.
FC: Any other media crossovers come to mind?
Newmark: Not necessarily media crossovers. We get picked up by a lot of blogs. For example, Wonkette likes to read us. I'm terribly fond of Wonkette. I use Topix, I use Bloglines, I use Technorati. We're out there.
FC: Craig, you've denied your own existence. How exactly does one go about doing that?
Newmark: Mostly with a sense of humor. (Laughter) Several years ago on April 1, we put out a press release denying my existence, which some people took very seriously. We said we were discontinuing the popular Craig's List icon as a cost-saving measure. Recently though, even when I'm talking to people, I may deny my own existence. Implicit in the joke is the notion that the site is not about me.
A version of this article appeared in the September 2004 issue of Fast Company magazine.