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WSJ on CraigsList and Zen of Classified Ads
prostoalex writes "Wall Street Journal profiles one of the Valley's most mysterious and secretive Web companies. A leader in online classifieds space and by some measures one of Web's top sites, CraigsList is ostensibly anti-ad and anti-self-promotion. From the article: "One industry analyst has estimated that Craigslist could generate 20 times that $25 million just by posting a couple of ads on each of its pages. If the estimate is to be believed, that's half a billion dollars a year being left on the table. What kind of company turns up its nose at $500 million?""
The kind of company that companies which wouldn't turn up their noses at $500 million doesn't want you to believe exists.
Companies can exist, thrive and even excel without taking advantage of every opportunity to maximize profit. This sort of company tends to be discomfiting to the type of company which would gladly throw some ads at you for extra revenue.
Companies like Craigslist and Costco--places that thrive on word of mouth, putting people ahead of profit, and genuine goodwill--tend to make "normal" companies uncomfortable. How do you compete when your competition has justly earned and kept the trust of the marketplace? How are you supposed to "optimize profits" with a consumer who knows what it feels like to be respected?
Obliteracy: Words with explosions
Come and see the violence inherent in the system!
Perhaps, one that has decided that it doesn't need $500 million?
I know, it hurts my brain too.
It's like looking back in time, back to the middle ages when only the aristocracy had ad blockers on their computers.
That "industry analyst" should tell his wife that "she is leaving thousands of dollars on the table" by not becoming a part-time prostitute.
Mea navis aericumbens anguillis abundat
The kind that likes to keep its readership? How much would viewship go down if they had to be subject to ads? Or how many people will just get adblocking software? I know I already do.
Is it possible that if craigslist didn't offer most ads for free, they wouldn't be where they are today, and they couldn't have cashed in? Was linus turning away millions by not charging $50 a copy for linux? Charging money for all ads on craigslist would be killing the proverbial gold-egg laying goose because it's not producing fast enough.
--- http://davidnehme.blogspot.com
that isn't driven to make all the money possible as soon as possible. Part of the reason CraigsList is so popular and people appreciate/use it so much is because they aren't a bunch of sell outs who will spam you with ads at every possible opportunity.
Also, sometimes when running a business, the best place to be is not necessarily the "biggest" and/or "most visible" place to be. Not every company dreams of or wishes to aspire to growing into some kind of huge behemoth like Wal-Mart.
---
http://wi-fizzle.com
Censorship is obscene. Patriotism is bigotry. Faith is a vice. Slashdot 2.0 sucks.
* that doesn't want the crap politics that happens every day in corp america
* who genuinely thinks customers come first
* that wants nothing to do with the power plays in the industry (their power play is right there with their loyal customers!)
* dont want venture caps knocking on their door
* who hates the idea that facebook wants 2 Billion for less traffic and prestige than their site
* who feels that their size is good and right for them, not for wall street.
* whose leaders and owners can sleep without worries at night
Have you ever listened to Craig in an interview? Do so, and you'll find 10 more reasons than I cited, easy.
Newsfollow.com
"What kind of company turns up its nose at $500 million?" how about a successful one? one with integrity, and one in touch with its user base, and one that wants to stay around?
people also scoffed at google's little one-line blurb text ads when they came out. are they scoffing now?
i'm certain there are plenty of guys who would love to put interstitials and flash animation on craigslist. and such people would drive craigslist into the ground. you don't make money on the long term by destroying your user base's allegiance by pissing them off
so your choice is: make $500 million this year, and much less year and year after that, as your user base abandons you, by putting annoying ads on craiglist. or: make $25 million this year, and keep growing, and stay the place to go to for online classifieds for all time, since you have won and deserve and keep the respect and allegiance of your userbase
"the customer is always right" ever hear that one? some people just don't get it: they are very shortsighted. they are willing to destroy craigslist's user base for a fast buck, thereby making less money over the long haul. that's a nice sound business sense
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
An analyst claiming that an advertising site could make more money...by advertising. There's some sort of feedback loop here I just can't wrap my mind around.
I never spellcheck and I freely admit it. Save your karma for more worthwhile "lol erorrs" replies
They may also be looking at it from a standpoint where they have set standards and people who use the site are aware of the standards. If they started posting ads on their pages it wouldn't be nearly as useful and I would stop using it. It's a lot easier to keep 25 million and happy users than to go for 500 million and not reach it and ruin your business in the meantime.
Our economic lives could virtually always be exploited in countless ways if we were willing to do so. Not everyone wants to live their lives in a way to allow them to exploit every "opportunity" that can be imagined. Not everyone really wants to truly maximize the economic value of their lives either. If someone wants to just have a business of their choice without pinching all "opportunities" to fill eyeballs with the paid messages of others, I hardly consider that a tragedy, no matter what kinds of dividends it could pay to the "greater economy". Nor do I consider it a failing of the economic system that competition doesn't force him to do so. I personally would consider that more of a rare victory for the the role of humanity in our economic system - a trend I hope continues at a stronger pace than has been the case for the past few decades in the US.
Sometimes, just creating a simple system of mutual benefit, and leaving it simple, is of much greater value than the usual constant gamesmanship of economically preditary behavior. Even in the middle of a ruthlessly free market.
Ryan Fenton
They rely on their reputation, and part of that reputation is the lack of annoyances. People buy, sell, and trade there because they don't have to put up with the crap that smothers most commercial websites. If they started selling ad space, their profits would probably experience a temporary spike, followed by a long, slow death as people jumped ship.
There are other classifieds sites. We don't *have* to go to Craigslist. We go because we want to. If we stop wanting to, then Craigslist dies. Since ads would drive us away, allowing them would be short-term profitable and long-term suicide.
And that's pretty much it. The guy is happy and making enough money as-is, apparently.
I'm all starry eyed about this guy all of a sudden. I mean, a true public servant nerd. His very existence totally undermines some of the basic tenets of capitalism. Of course, he could just cash in so fast it's amazing. But he doesn't, for some reason. And they send this guy from the 'money news source' and he manages to impress him. Not to be stared at like some kind of crazy, but to impress him and then take him back to his hotel. I mean, it's not like Craig's List is that impressive- you could rebuild it in a month (week? Three day codefest?) with the right developers. So customer service is key.... And that's what he provides. I'm bowled over.
I love the 'give us the money instead' comment, though. I've always wondered if there would ever be a way for an Internet company to farm big corporations for real people.... At first, I thought that that was what Google ad revenue was doing.
My little site.
CraigsList's popularity is due in no small part to the LACK of spamming users with all kinds of crap we don't want to see. Here's hoping they don't turn off much of their clientele by adding advertisments.
And now for a cliche-prediction-bomb: mark my words... all good things come to an end... Eventually every business capitulates to the almighty buck and CraigsList will not "buck" the trend.
(end of post)
...yes, stupid lameness filter, I'm looking at you!
Swedish plasma phys. PhD student; MSc EE; knows maths, programming, electronics; finance interest; seeks opportunities
turns up its nose at half a billion dollars? No company. What kind of analyst says that a company like Craigslist can generate half a billion dollars in revenue? An analyst hyping himself, I'd say. Remember analysts who said that the Dow would hit 20,000?
Maybe it's worthwhile to heap accolades on Craigslist for being a "good" company. Or, just maybe, they're happy with reasonable year over year growth, rather than uncontrollably exploding, not unlike a supernova.
Besides, it strikes me that if the name of the game is for Craigslist to draw its members to view classifieds on its various sites, then it would be a disservice to those members who advertise on Craigslist to send the viewing members away from the site - even if classifieds are free. I kind of think that the idea of the sort of commercial ads mentioned in the WSJ article probably strays from the Craigslist business model.
-h-
That's Craigslist, making it impossible to compete because of their low, low prices. And it's working. The newspaper industry is furious at being underpriced. Tough.
The kind of company that 'turns its nose up' at $500,000,000 dollars is the kind of company that ultimately gets sold for over $1,000,000,000 when the user base is sufficient.
Craigslist.org is a breeze to use and very useful. By keeping their content clean and refreshingly ad-free, they have secured themselves as the de-facto classified website on the internet.
Content is king and as far as classified ads go they are the king of content. Just you wait - Craigslist.com will sell for over one billion US (you heard it here first!).
-SmR
Maybe Sergey Brin can take some notes.
/end rant
It's a tough concept to grasp but sometimes money isn't everything. At least Sergey is now realistic about the old "Do no evil" mantra but it's pretty sad to hear effectively, "Yes, we are filtering content for the Chinese government but... " I and I think many others stop when we hear rationalizations. Yeah it's a lot of money but consumers are waking up and paying attention. Google is helping an authoritarian government control its citizens, I don't want to hear rationalizations. Corporations need to start weighing in "ethical capitalism" costs. Sure the profits might be huge now but when you weigh in the ethical costs, those profits aren't so large.
The key to this consumer awarness is information. We can easily learn about sweatshops thanks to the internet. We can learn about content filtering thanks to the internet. We can learn about AT&T splicing fiber for the NSA thanks to the internet.
You can no longer rationalize and use advertising and PR as effectively as before, consumers are less ignorant.
2 years and no mod points. Join reddit. Because openness is good.
One that isn't just in it for the money. They are in it to preform a service and have a belief about how that service should be provided. IE, not bugging the @#$%@#$^% out of your costomers to the point where they go to some other site and spend their money. Or they stop coming to your site because it's hard to navigate. Or......
The list can go on and on. I for one applaud craigslist, and the fact that they DON'T advertise on their site is the reason I use it more than just about any other site.
How about a company that wants to stay in business, and GROW from 25mil, not lose its base within 3 months because of an add fiasco.
Doesn't your argument suggest that the financially insecure would be more likely to, well, prostitute themselves? If so, aren't you just underlining the parent's point?
We all loved it with no ads, and then something happened and we debated about whether or not to add ads to slashdot, and it basically came down to, "we have to if we want to survive". Faced with that, most slashdotters preferred slashdot with ads to no slashdot.
If craigslist can survive without pimping ads to users, more power to them, and their userbase will only grow.
Why is it that authors of these articles can never understand the simple fact that the reason I go to Craig's List is precisely because I'm not being bombarded with ads and junk and a horrible cluttered layout? Doesn't anyone remember how refreshing Google was when it first started (and still is to a certain extent, except the other companies have de-cluttered their pages)? Yahoo was a horrible experiment gone wrong in seeing how much crap could be jammed into a portal!
Sure, if craig's list had ads, they'd make some more money, but a lot of people, myself included, wouldn't visit as often or at all, and therefore the article's total sum of potential earnings is an over-estimate.
Your point?
If the indutry analyst's wife likes that type of thing, then she's passing up a lucrative way to leverage her operational experience in a dynamic and verically stimulated market.
Works for me.
If they can make $25 mil with just 21 employees, think how much they could make if they hired 500 employees?
drink beer, and let the water run the mill
In case you're asking a serious question and not being silly. It's WallStreet Journal.
if analysts were running the show, they'd run them into the ground. industry analyst is analogous to movie critic. full of opinions, but unfortunately, none of them right
Not remotely an expert on these things, but... could ads also maybe introduce the possibility of competition for products and services with the userbase? You know, like, maybe as a really bad example Joe Schartzenheimerpfuzen offers up an ad for a used-but-in-good-condition PSP, but his page gets a banner flashing "PHYSICALLY HARM POLIITICAL FIGURE X AND GET A FREE* PSP!!!1111" and so forth. Might make it harder for poor Joe to vend off his unit. I know I'd be immediately tempted to blame ad space if I couldn't get rid of that PSP.
I am with you on most of your comment, but whats so altruistic about Costco?
I noticed that the main page has been revamped recently. Rather than featuring the giant metropolis areas: Atlanta, Phoenix, Boston, Dallas, etc, it now lists the United States' states next to international. One extra click -- most people don't think twice about when navigating to specifically-sought information. Seems a smart move.
The $500 million _is_ just an estimate. I wonder what the analyst's assumptions were by the statement "a couple of ads." Text ads, box ads, or even (ugh) macromedia flash advertisements. . . ? The online advertisement industry analysis requires a plethora of variables, all of which are slight and not entirely measurable, especially when "cost per click" vs. "revenue per click" are involved.
Wow, that makes me think how much more money Toyota could make this year if they stopped making such high quality reliable vehicles, and just bolted a crappy SUV body to a cheap truck chassis, and sold it for a giant profit, like GM did. It would probably take at least 5 years before consumers really caught on, and in the meanwhile execs and shareholders could make many billions. Of course then they'd implode and Hyundai (or whoever up and coming) would have incentive to beat them in quality and steal all their customers, the way GM has lost all their customers to Toyota. Yep, real geniuses we have in business in America these days.
From the Wall Street to the WSJ to the board room, the culture of short term thinking to screw the customer is pervasive. It's all about rape and pillage for the shareholders, kill the company (after offloading the stock to E-Trade suckers) and then invest somewhere else. Where will investors go once US business is depleted? China & India of course.
Wouldn't this be a horizontally stimulated market?
Sorry, couldn't resist.
Craigslist is the exception that proves the rule. Consider the following facts:
- Craigslist has no investors or debtors to satisfy.
- Craigslist has lucked into a large and loyal customer base built entirely on word-of-mouth..
- Craigslist costs very little to keep running.
- Craigslist has goals set entirely by one individual who has no desire to make more money than he needs to live off of.
If any of these factors didn't apply, Craigslist would be just another company that would be utterly incapable of turning its back on that half-gigabuck. And yet each of these factors is extremely rare.I actually find Craigslist's money policies a little short-sighted. Not that I'm entirely against them providing free ads. It's nice that you can post your resume, or sell your couch, or ask somebody to come and fix your computer, and you don't have to pay. A lot of the people who use these services couldn't afford to use them if they weren't free.
But why should all the people dealing in real estate get a free ride? I don't mean people who just want to split their rent with a roommie. I'm talking wealthly landlords and folks selling million-dollar homes. Who benefit not just from the fact that Craigslist is free, but the fact that the housing search software is well-designed. They should pay. If Mister Newmark doesn't want the money, there are plenty of worthy causes.
From TFA:
"Having taken advantage of their hospitality for the better part of an afternoon, I stand to take my leave, but my hosts insist on driving me back to my hotel. Once there, we say our good-byes and, belatedly, a thought occurs to me -- an afterthought, perhaps. If Craigslist does what its users ask of it, and Craigslist doesn't need or seem to want all the ad revenue it declines to collect, maybe we, as end-users, should ask them to post some banner ads and give us the money instead.
There's something wrong, I suppose, in that reasoning. But I like the idea."
Evidentally that reporter has not heard of all those other companies that tried that business model -- specifically, making an explicit "you view ads, you get compensated" relationship, usually offering a free computer or cold hard cash. Last I heard, most of those -- if not all -- crashed and burned. Anyone know of a successful one?
100% right on. you used the word "spam", and while i know you meant visual spam, it reminded me of something.
One of my favorite things about craigs list is that you *never* need an account to use it, so you know they aren't spamming you. no crap in the mail box, no crap in the box, so lots of people use it and it works.
their whole point has been conmunity-focused interaction. it's impossible to have a community if the participants are all on the receiving end of the host's spam. if they had ads, or required accounts, it wouldn't be a community, and it wouldn't be used the way it is
They rely on their reputation, and part of that reputation is the lack of annoyances.
What amazes me is that this is not more obvious to so many people in the business world. The Web really just a series of interconnected user experiences. The author of this WSJ piece seems to think Craigslist is wacky - just plumb daft! - for forgoing potential revenue in favor of taking care of customers. After all, if Craigslist is taking care of its employees and making money, why wouldn't it want to have 10x the employees and 20x the profits! Why wouldn't it want to control the world?!
This snarky little tidbit reveals how little Mr. Carney understands Craigslist, the Web, and customer satisfaction. At the end of the day, all he can think of is all of that (vaporous, as biendamon pointed out) potential profit that *someone* is missing out on:
Argh! Someone put some banner ads on Craigslist, and do it quick, before Carney gets an aneurysm!
Read the EFF's Fair Use FAQ
I think this calls for a modification to the traditional business model:
1. Create a company
2. Turn down profit opportunities
3. ???
Indeed, Craigslist is plenty of ads. Analysts who say that Craigslist should seek more profit by making people view ads they aren't interested in in order to see the ads they are actively seeking by viewing Craigslist in the first place are, well, perhaps missing the source of Craigslist's dominant position.
"What kind of company turns up its nose at $500 million?"
One led by a person believing there is more to their enterprise than money. I think I'd like to work there.
- The Kessel run is for nerf herders. I can circumnavigate the entire Central Finite Curve in a lot less than 12 parse
The targeted ads would devalue the free ads.
If the free ads are worth less then there will be less customers.
Less customers, less content, less visitors, less paid advertising revenue.
Not to mention the incalculable value of goodwill and trust - I mean you just can buy that!
Better go back to analyst school there buddy.
This is false. They _are_ maximizing profits, just over the long term. These sorts of companies make strategic decisions which pan out over years or decades, not over one or two financial quarters. You do them a disservice, and make these managers lives more difficult, by accusing them of not seeking profits. The CEO of Costco has been beating back financial analysts and stockholders for years because people like you keep the myth going.
The lesson is that you can make profits, and increase profits, and build a stable, long term business plan that benefits _everybody_ in myriad ways (including with dollars and cents), simply my making prudent and judicious business decisions.
And you don't need to sacrifice any piece of the pie to make it work.
Your type of comments make these things sound like a zero sum game. If your ecological you have less profit. If you're family friendly you make less profit. That's crap. You can do both equally well and still compete w/ the archaic business models.
What's so hard to understand about craigslist being popular and not running ads? I think the analyst failed to realize that the ad revenue generated by craigslist's popularity would be significantly dimished by the popularity hit that craigslist would take for running ads.
Why is it that Craigslist has to be so ugly? It's as bad as MySpace, but in a completely different way. It used to be that good sites that didn't make your eyes bleed succeeded (google.com, zombo.com, etc)
tone
tone
Sole? Sole proprietorships and very narrowly, privately held corporations, partnerships, etc. make up a large percentage of businesses, and many of them operate in accord with interests of their owners beyond simply maximizing financial return or market value of the business.
Widely, publicly held companies whose management's sole duty is to maximize the financial return to the owners may make up most really big businesses, but they certainly aren't most businesses.
Did you read TFA? They charge for real estate in NY. Granted, they made that decision because of spam, but not all ads are free.
Search RapidShare and MegaUpload!
lets see 21 people 25 million a year.
I can live on that.
Why Be greedy?
There are two problems with thinking about the long term (especially CL, less so Costco). First, in the long run you are all dead. Second, it's highly likely that your corporate entity will be dead far sooner than imagined. If there had been an ethical bullwhip company and an evil profit maximizing one the first left a lot more on the table than the second for pretty limited long term benefits. This does make a huge assumption that the ethical companie is more likely to attract talent who would allow them to move into throttle design or something similar, if that's true than your ethical company is behaving more like Costco.
Which is to say, they compete (in the labor market) by recruiting talented folks who are far more productive than their minimum wage peers. It's a gamble but one that has paid off so far for Costco. A huge portion of discounters labor cost is eaten by training and new employee productivity costs. At the core Costco is able to compete because they can attract the top few % of retail employees and compensates them in kind (my bet is that most of them would be making the same at other retailers because they would have moved into management positions). Wal-Mart also pays for talent but their compensation is higher for store managers and logistical desing folks. Neither is "right" or "wrong" in a legal/competitive sense as at both stores about the same portion of a dollar spent goes to employee costs (SG&A is within a quarter percent at Costco and Walmart).
In addition I've always found it odd that people will wait in far longer lines at a Warehouse type store than they ever would at Wal-Mart (whose lines are also longer than most stores). Without that tolerance Costco wouldn't be able to compete as effectivly with their high cost/high productivity labor model.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
The idea of keeping long-term economic viability in play is so last decade.
So Craigslist doesn't need the $500M to run the business... How about giving it all to charity? There'd be that category where people would advertise the cause that is dear to them, and some flaging options for the community to decide whether that cause is worth the advertising we're exposed to. At the end of the month, the money is split according to the number of vote received. There would probably need some form of check and balances to make sure the charities listed are for real, and the same people can't just keep on voting, but you get the gist
I've heard numerous complaints about most of the places around here in relation to returns (Future Shop, Radio Shack, London Drugs, etc). In particular, I've yet to see somebody manage to return a digital camera that has decided to die an untimely death...even with warranty
However, with Costco, you bring in your item and you get a replacement. Sometimes even when the warranty has already passed. For that reason I highly recommend them for such things as digital cameras, etc, simply because when it comes to returns, they don't treat customers like potential cons.
I feel that craigslist wouldn't be "Craigslist" today if it weren't for the plain looking, "un-targeted", advertising free website. I would have stopped using them a long time ago if I had sniffed them becoming business.com.
You are mostly right, but wrong on one key point: they didn't "luck into" a large and loyal customer base. That pretty directly resulted from their business philosophy (although certainly timing was key as well).
Craigslist may be walking away from 500million a year now, however Craig may end up with something worth a lot more later because he had the foresight to stick with his community-based approach to business. Who knows what value the community can muster if left to it's own accord. Next year there may be a billion dollar opportunity that Craig is comfortable with because he feels it will enhance, not diminish the community. Of course, that's just my 500 billion cents))
For example?
Actually, ebay owns 25% of Craigslist.
You're picking stupid nits. Most of their real-estate ads are still free. If you'd followed the links I'd provided, you see free ads for million-dollar house, and rentals that go for $10,000 a month.
Actually real estate ad's in certain places cost money, because of spamming issues
This kind of company can only exist when it's not publically owned. The pressures of revenue growth on public companies would never allow this kind of company to exist.
Didn't the dot-com boom (and bust) occur in the last decade?
http://outcampaign.org/
Think what could happen if this busines model of giving the customer what they wanted was applied to other websites. Inagine CraigPortal. Much like yahoo.com but without all those annoying flash annimation ads. Other ads would be restricted to only a few per page. And no animated gifs either. Or CraigMail. Much like Gmail but with a max limit of only two ads per page. (something has to pay for the servers and bandwidth)
Maybe they don't want to rake it in, only to find out that their base erodes, leaving them with "just another crappy ad infested pop-up site" that has to put more and more crap on their site to make money from the eroding customer base. Meanwhile the people that made it cool in the first place go off and create their own Craigslist, stealing away the sustainable model they have now and leaving them with a craptacular popup city populated by WalMart shoppers from AOL.
So, they are not really leaving anything on the table. The money that WSJ is talking about is only available if you cut open the golden goose.
And there was no "business philosophy". Craig Newmark didn't set out to found a business. He just started the site as a free service, paying all costs out of his own pocket. He resisted making any of his advertisers pay for a long time. Finally, the thing grew to point were he had to choose between developing some revenue and shutting the thing down.
Yeah i love Craiglist as much as the next guy, but one thing i think they could do to improve their userbase tremendously would be to include every city in the world. wouldnt be hard to do, the interface just needed to be changed a bit.
MikMik Baby Organics Mikkaworks
Bacon, butter, whole coffee, paper products, gotta love it.
And milk at my local supermarket is $3.99/gal, whilst Kirkland brand is $2.49! Holy fucking shit Batman!
Does anyone remember the schemes where you'd install adware on your machine and "GET PAID TO SURF THE WEB!!!"?
My poor friend fell for this and after 3 months her PC became unusable. She did get a check for $2.33, but it wasn't worth it.
We should just infect Carney's machine in order to leverage his whatever. He'll stop complaining about not enough ads on the intarweb.
Man, you really need that seminar!
Companies can exist, thrive and even excel without taking advantage of every opportunity to maximize profit. This sort of company tends to be discomfiting to the type of company which would gladly throw some ads at you for extra revenue.
It's more a commoditizing of the market to my mind. That is, if you take all the profit out of a market, who would bother to compete with you? Classifieds on Craigslist become analogous to pork bellies on the Chicago Merc.
Hmm, your concept is remarkably similar to the start of the US income tax.
I disagree with your principles anyway. Just because someone is successful doesn't make them an acceptable candidate for a financial soaking.
Slashdot - where whining about luck is the new way to make the world you want.
Craig could always call up some bankers and do an open-auction IPO, you never know.
CraigsList is the kind of company that offers free lastminute "hookup" ads for/from real people. And instead of slapping ads in the middle of that delicate, if casual, transaction, instead offers a safer sex forum. The kind of company that steadily grows and has no real competition in its niche, because buyers and sellers have enough trust that they operate like a community.
What's so "zen" about running a company you'd prefer to use yourself, even if you're rich? The Wall Street Journal doesn't seem to understand business, and certainly shouldn't be throwing around smarty words like "zen" that they read on an old Mac, years after missing the point of Apple, too.
--
make install -not war
Sole Proprietorships make make up the majority of businesses, but, if you look at it in terms of revenue, I think you will find the largest businesses make most of the money, and have the greatest economic impact.
We all know what to do, but we don't know how to get re-elected once we have done it
"Companies can exist, thrive and even excel without taking advantage of every opportunity to maximize profit."
Think about why there are so few of such companies? Because in the marketplace, when such companies exist, they often lose to the more aggressive profit-seeking competitors.
Sometimes a company (like Craigslist) will dominate, but more often (far more often) they'll get bought out, or a company will just invest in advertising to steal their client base.
I do whole-heartedly agree with the statements that a small number of people create the most value, and a large number of people in most companies deliver little "bang for the buck".
I really liked your post, and think I can suggest an answer to the business of why ads are free. It's the "barrier to entry" thing. It's already happened to me. I wanted to test my very first web site product ad - so I put it in CraigsList for free. There's no way I would have given anyone on the web my credit card number for this tiny test (more worried about personal security on this one than the ten or fifteen bucks, I suppose). I got 20 hits on my web site, confirming that it's worthwhile to advertise/give-away on CraigsList. Because I can advertise for free, but more importantly - because I could initially conduct a small test for free - it will be my primary vehicle when my product goes live.
- The Kessel run is for nerf herders. I can circumnavigate the entire Central Finite Curve in a lot less than 12 parse
I am a concerned citizen of Skylar Durden's Ivy Nation against Ann Coulter's Adam's Apple.
Everyone sells out at some point.
Craigslist will be no different once the smell of money corrupts them enough. Its the way of the world.
---- Booth was a patriot ----
Doesn't your argument suggest that the financially insecure would be more likely to, well, prostitute themselves?
yes, it does.
If so, aren't you just underlining the parent's point?
Only if the parent posters point was that the analyst was financially secure (i.e. didn't want any more money, not just necessarily needing any more) but that he would STILL want his wife to prostiture herself simply for the sake of attaining MORE money (just for the sake of having more money). I guess I don't assume that all analysts are millionaires and financially secure (I doubt if the majority are).
the kind of company that knows it has more of a future by restraining its greed rather than by indulging it.
when religion is no longer the opiate of the masses, governments will resort to real opiates.
Don't have a cite, but I vaguely remember reading that while each individual large business has much more of an economic effect than any individual small business, the sum total of all economic effect generated by all small businesses is significantly more than the sum total of all economic effect generated by all "large" businesses (subject to your definitions of small & large, of course).
A society could do a lot worse than have economic policies which favored small businesses, and to ignore the desires of large businesses. You'd tend to end up with a highly-competitive & agile marketplace, but where no individual actor (aside from the government of course) is likely to be big enough to cause significant damage to the society even if they wanted to.
Quoting from the end of TFA's intro:
"What kind of company turns up its nose at $500 million? That's what I'm here to find out."
IOW, that was a teaser, transformed into an ideal troll for an endlessly gullible, non-TFA-reading Slashdot audience. And just to complete the loop, the end result of this is to drive up ad revenue on Slashdot. Gotta love those virtuous circles!
Actually, of everyone who says Costco is simply employing the "cream of the retail floor crop" nobody has backed that up w/ evidence. Is it so hard to think that if people are simply paid more they'll be more productive, regardless of what they brought to the table during the interview.
Could it... maybe... be... that employess will work for what they're paid. I.e., their labour output is elastic in relation to compensation....
I don't mean to suggest that you could randomly increase people's salaries and expect more instantly. You have to factor in expecations and such when employment began. But the notion exhorted by the previous poster is not only simplistic, but not particularly humane, either (in the sense that it speaks ill of the "average" person).
That would be nice, I could afford a hummingbird feeder that hummingbirds really like.
Craig
The business cost essentially nothing to run, and is making reasonable profits to allow for the founder to live a lifestyle in excess of 99.99% of americans. Every year the market share grows, because who can compete with free? When he is ready to to sell out, the marketing "geniuses" on wallstreet will look at the number of page impressions, assume they can plaster the site with flash add and make BILLIONS. He will sell out for billions, and wallstreet will run the site into the ground. What's not to like?
----- There are two kinds of people in this world, my friend; those with loaded guns, and those who dig.
Who's talking about soaking? I'm talking about charging them a reasonable fee for a service they find valuable.
I think it is extremely unethical. If this Craig guy is so brilliantly and genuinely Good(tm), then who doesn't he slap a Google ad-bar on each page and donate all the money to Doctors without Borders or some other nice things? He readership wouldn't care, since he'd write a short message on the frontpage explaining this.
This is half a billion dollars buying somebody else a few private jets, y'know..
Then why not charge everyone that reasonable fee? Why single out people based on feeling they're making too much?
Slashdot - where whining about luck is the new way to make the world you want.
I'm talking wealthly landlords and folks selling million-dollar homes. Who benefit not just from the fact that Craigslist is free, but the fact that the housing search software is well-designed.
It really isn't all that well-designed, though. It returns search results fast, sure, but if I'm looking to find a home, to make an investment that will account for a major portion of what I spend each month, I'd like a little more powerful search abilities than rudimentary price and region selection and keyword search against the body of the ad.
Then again, I've worked in online classifieds myself, in the past; even if craigslist offered a good structured search tool, it would be useless as long as advertisers fail to provide useful, fielded data. Many are still stuck in a newspaper-based, pay-by-the-word mentality.
Hear me out, landlords and brokers: I'm willing to do a lot of the gruntwork involved in searching for a home myself, if it means I can get what I'm looking for more quickly. If you put your information online, I can find it, and then we can work together and neither of us will waste time following up on leads that could have been identified as dead-ends weeks ago.
And while the reporter is throwing numbers around, he might have asked what the cumulative value of craigslist is to its users. Does that value exceed $500M per year? If so, then turning down paid ads is a net economic benefit. One might even wish that there were a standard way to measure this value, so that craigslist and other companies could point to it to explain their behavior.
The evaluation of an action as 'practical' . . . depends on what it is that one wishes to practice.
If I have to explain that to you, you haven't been following the discussion.
Which gets us to a related issue. Newspapers are all convinced that they have to move onto the web, stat. Yet none of them seems able to figure out even the basics of good web site design. Which is why Craigslist would still be stealing all their classified customers, even if they charged the same rates.
I'm talking about charging them a reasonable fee for a service they find valuable.
Craigslist, unlike most of the classified advertising industry, recognizes that its customers are not the people who PLACE ads, but rather the people who RESPOND to ads.
Take the New York real estate listings as an example: the fees have been imposed not because NYC realtors have deep pockets (though many do), but rather because with no cost of entry, the signal-to-noise ratio on the listings pages was dropping too low and causing customer dissatisfaction.
"What kind of company turns up its nose at $500 million?"
The kind that believes industry analysts and experts who say outrageous things are likely talking out of their asses.
Half a billion? I really really doubt it.
"People who do stupid things with hazardous materials often die." -- Jim Davidson on alt.folklore.urban
Koch Industries
rank
craig@craigslist.org ... and you're right, don't believe everything you read.
I do think I need a simpler, plainer feeder; the hummingbirds check mine out, no feeding, and I have plenty in my backyard.
thanks!
Craig
Honestly, with adblock, I'm completely surprised when I come to kuro5hin, slashdot and other sites on public computers. It's amazing the difference it makes sometimes.
GENERATION 26: The first time you see this, copy it into your sig on any forum and add 1 to the generation.
They are maximizing their profit. They're just not applying the standard business combination of stupidity and myopia.
Menards is another good example.
That costs extra.
you just outlined the perfect line reasoning by some business exec to define why the customer needs flash adverts and interstials: they are oding right by the customer. the business exec knows what they need
nope
the customer is always right, period, end of story
of course the customer can be a moron and not know what he wants or needs. but it's not your right or duty to decide that for him. only because business people who do that usually wind up telling customers who do know exactly what they want and need why they want and need something they really don't, for some other agenda
in short, you can't trust a business exec to impartially represent the customer's agenda, so don't try to at all
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
Nasty old 'freedom' rears it's ugly head. To recap it for you:
Anybody can charge whatever they want to whomever they want (except where said freedom is taken away by government edict).
I can sell you my digital camera for $4, or I can give it to you, or I can refuse to sell it to you for $17,348.54.
I can single you out because you drive a BMW if I like (or, rather, because you're probably a prick, which is a good bet.)
(I kid, I kid. I know that several large companies use Apache. But if you, say, weighted websites by their Alexa popularity, then the Apache/IIS competion would be a lot closer.)
The assertion that 'it's not a zero sum game' can be asserted when somebody is declining 'revenue' too, although it's usually applied as an arguement in cases that tip the other way.
It is NOT half a billion dollars buying somebody else a few private jets. No 'competitor' to CraigsList is socking away that kind of cash, and they won't when someone like Craig is driving the price to zero.
It probably frustrates a certain sort of person, though. Are you one who finds things like the above frustrating? Do you also complain because there aren't vending machines along all the hiking trails in National Parks?
... that's so secret, even I don't know about it?
Cool!
I should ask the folks on the N Judah or 6 or 43 bus about it.
Craig
Great article, kinda funny to see such a deep clash of values.
thanks your wife for me!
Craig
And if you owned 1% of Craigslist and found out that instead of making 50k you could be making $5 million? Think of all the starving children you could feed in exchange for not making Guido IROC look at an ad while he searches for his 22" polished chrome rims.
Of course, the real counter arguement to this is that Craigslist would not be where it is today if it was selling 2 adds on every page to the highest bidder is as useful as saying if every user paid $10 a month, Craigslist would be pulling in $500 million a year
Yeah yeah, I know, rah rah Costco you-have-a-corporate-conscience-so-I-can-feel-good -giving-you-money and all that, but WalMart is not nearly as bad a place to work as people make it out to be. Granted, its probably not going to appeal that much to somebody who reads Slashdot, but people beat a path to their door when they open a new store:
a rt26.html)
c /a/2005/08/17/MNGDPE91AH1.DTL)
When one opened in a not-so-great neighborhood in Chicago, they got 25,000 applications (!) for 325 jobs. (http://www.suntimes.com/output/news/cst-nws-walm
In New Jersey, 8,000 applicants for 350 jobs. (http://www.nysun.com/article/34316)
In Oakland, 11,000 for 400. (http://www.sfgate.com/cgi-bin/article.cgi?file=/
Help poke pirates in the eyepatch, arr.
Slashdot psuedo-socialism aside, there is a difference between profit seeking and prostitution. "You're a prostitute!" isn't an insult because a prostitute accepts money, its because she accepts money *for sex*. Many people accept money, and actively try to maximize how much of it they get, for providing legitimate goods and services. I do it, I'm guessing you do as well: your boss doesn't say "Hey, Detritus, you might as well be prostituting yourself" when you go in and say "Hey boss, I've been putting in long hours and my last three projects were smashing successes for the business, how about a raise?"
Its his business and if he wants to run it in a non-profit-maximizing mode he's free to do so, but I'm wondering at the wisdom of it even from his perspective. Lets say he thinks wealth is corrupting and just would hate, hate, hate his life if he had $500 million a year coming in. Hey, thats defensible. So just *give away the money*. Put 3 little text ads on every screen, collect a couple tens of millions of dollars, and pick an African village or two to raise out of poverty. Or donate some money to St. Jude's. Or scholarships for underprivileged kids. Or a free puppy for everyone in the state of Wyoming. Or, here's a thought, give the money back to the users -- hold a raffle or something, once a week someone gets a pop-up saying "Thanks for using Craigslist. You just won $10 million. No "#$", really, I really hate being rich. This fortune was brought to you by our friends at Google AdSense. Incidentally, we found 34 results matching your search of 'free microwave'."
For the vast majority of things which humans value $500 million will certainly improve your ability to enjoy it. Even the obvious counterexamples "You can't put a price on love" or "Money doesn't help me enjoy my children" are more or less false due to opportunity costs: supposing I was smitten with a beautiful girl, more money means less time working on putting food on my table means more time to gaze into her eyes (hey, get out of my geek fantasy). If I had children (hey, get out of my geek fantasy), even if I had no intentions of spoiling them rotten $500 million would make sure I made every last T-ball game.
Help poke pirates in the eyepatch, arr.
Just imagine how much money this reporter's wife could make turning tricks near an army base... she could probably make 20 times his salary. That's just money left on the table. I wonder why he doesn't have her do that?
He's held seminars on how to build a competing website. One of my exes used to know the guy. He's got enough money. Why must people wonder at a person/company turning down the possibility of making more money when already that person/company makes more than enough?
Besides, placing ads on the site may just drive people away. Part of the allure of the site is that it's anti-ad. It makes its money by charging to put up job ads (NOT resumes or seeking employment, just those compaies/people looking to hire), and only in three (it could have gone up) metropolitan areas. Craig's got a plan that bring in more money that he and his employees need. Why knock him for not being overly selfish as too many companies are these days?
A couple years back, for April Fool's Day, ads were placed on the site. Aaaaaahhhhh, that was good!
It's a girl!
That sounds a bit like the infamous musician selling out question. Sure, it's nice to go for Hollywood and be a one-hit wonder, but then you turn up broke five years later when no one buys your new material. On the other hand, that wedding singer is making a stable five-figure salary. The question is risk vs. reward - is it worth it to bet everything on a system that might go bust, or would you rather opt for a simpler, more stable system that keeps you alive and eating?
I did RTFA, and the final paragraph made me chuckle: Having taken advantage of their hospitality for the better part of an afternoon, I stand to take my leave, but my hosts insist on driving me back to my hotel. Once there, we say our good-byes and, belatedly, a thought occurs to me -- an afterthought, perhaps. If Craigslist does what its users ask of it, and Craigslist doesn't need or seem to want all the ad revenue it declines to collect, maybe we, as end-users, should ask them to post some banner ads and give us the money instead. There's something wrong, I suppose, in that reasoning. But I like the idea.
If you've never read the WSJ editorial page, the one that prides itself on being the most conservative ed page in America, it gets to be a broken record - profit good, free market good, regulation bad, liberals ruining America, etc., etc. The author here shows a complete lack of empathy with the people he chooses to serve. When people visit Craigslist - we're talking a very general public and not the hardcore Slashdot crowd here - they came to post an ad. They aren't interested in making a few cents from a banner ad in addition to it. They want to post their advertisement, then get out. They don't want to wait for the page to load any more than someone who that someone wants to get lost in the want ads section of a newspaper looking for a job.
This is what truly scares me about corporate America, and perhaps why there's so much common respect for a certain Mr. Warren Buffett, who gained much of his wealth through investing in stable, bread-and-butter industries. The heart of entrepreneurship is about becoming self-subsistent on one's own creation more than become fantastically rich about it. If Mr. Carney knows so much about running a successful business, then what's he doing writing editorials for a living?
Libertarians somehow believe that private businesses should be stronger than governments but weaker than individuals.
If I recall, too many scams. (I'm not sure, since others in customer service handle those; my focus is on NYC apartment brokers, light forums moderation, spamvertising, stuff like that.)
Sometimes, we have to make awkward decisions, based on feedback, but most decisions are subject to future revision.
You can ask more, here, or email craig@craigslist.org
Well, one thing is you will not read in the WSJ is about the next Google or Craig's List, until they hit it big. Instead, you will read about steel companies. WSJ is similar to Forbes, new ideas simply confuse them. The article was rather funny, with the author not hiding his utter confusion, mixed with a bit of contempt, about their business model. Buckmaster tries his best, explaining to the WSJ reporter in simple terms "You can't run a steel company the same way you run an internet company." Here and there the lightbulb goes off, for example when Buckmaster explains how taxes work to the reporter. But overall he doesn't get it.
I read that too fast, but it's been that kind day.
Let's see. Craigslist turned its back on a half billion dollars because they don't like Google ads. Exactly when did Koch Industries do something even vaguely similar?
I can only ask you the same question I asked the other guy.
Isn't Craig's List already entirely ads?
Can you be Even More Awesome?!
However, once you start making those distinctions, you start injecting politics into the site. I think the point here is that craigslist has managed to keep itself clean from such labels and should continue to do so. If you only insert restrictions to keep the service working well and reaching as many as posible, the money saved by those of less resources will easily surpass whatever the rich guys do. Also, if you have a lot of money, there are probably better ways to make it grow than penny-saving at Craig's.
Who looks for million-dollar homes on craigslist, anyways?
What kind of company turns up its nose at $500 million?
The kind that survives for a very VERY long time.
Because ads == prostitution and not everyone is a whore, even though you can earn tons of money in that line of business. Imagine! The author of that article is probably forfeiting thousands of dollars by not selling himself as a callboy during the evenings!
I run an online game. I would feel dirty and my game soiled if I were to put ads on it. The only "advertisement" I ever had was a) a banner for the T-Shirts made specifically for the very same game and b) a Get Firefox banner because I want people to use Firefox (Firefox users are causing me much less trouble than IE users, for some reason).
Assorted stuff I do sometimes: Lemuria.org
"But why should all the people dealing in real estate get a free ride? I don't mean people who just want to split their rent with a roommie. I'm talking wealthly landlords and folks selling million-dollar homes. Who benefit not just from the fact that Craigslist is free, but the fact that the housing search software is well-designed. They should pay. If Mister Newmark doesn't want the money, there are plenty of worthy causes."
Charging 0.25% commission for each listing would net Craig 3+ million on that real estate page you listed.
If you can excuse the small amount of self promotion, but I think that ethics plays a large part as well.
With my company (http://www.beskerming.com), we run no ads on our site, and our free mailing list is just that, free. There are no subscription fees, no advertising, no vendor pitches (besides our own occasional announcement), no spam, and no vendor sponsorship. It keeps our readers happy, and we have seen our influence stretch to over 400 million people via those responsible for their information and financial security, without really pimping the service to all and sundry. So long as we've keep our overheads low, it doesn't matter how many people receive our message from that service.
Faith in humanity keeps the list free, and it breeds some responses in kind. After the list started getting spammed with pump'n'dump scams (at least the moderator was spammed - no messages made it on the list), we sent out a simple request for recipients to review their system security and to ask anybody they had forwarded a copy of our messages to to do the same. Within 18 hours, the spam stopped. No subscriber has ever unsubscribed, and even after polling them for what they wanted to have done with the list, most responded that they enjoyed having access to a truly free list and wanted it kept that way.
Yeah, it would be easy to spam the list silly with ads, sell the subscriber list, and otherwise bleed the readership dry, but that is not ethically or morally justifiable and so long as I control the ethical path of the company, it will never happen.
We originally started the list to build credibility and reputation in the eyes of the market, and to show some of our capabilities, and even though we only recently started spreading word about it, we have attracted some quality readership who are firm supporters (at least of our free work).
InfoSec that matters, when it counts.
If you can excuse the small amount of self promotion, I think that this is essentially an ethical decision.
With my company (http://www.beskerming.com), we run no ads on our site, and our free mailing list is just that, free. There are no subscription fees, no advertising, no vendor pitches (besides our own occasional announcement), no spam, and no vendor sponsorship. It keeps our readers happy, and we have seen our influence stretch to over 400 million people via those responsible for their information and financial security, without really pimping the service to all and sundry. So long as we've keep our overheads low, it doesn't matter how many people receive our message from that service. Sure, we'd like to make more money, grow the company and all that other stuff, but it all goes back into the company - improving the services we provide our clients.
Faith in humanity keeps the list free, and it breeds some responses in kind. After the list started getting spammed with pump'n'dump scams (at least the moderator was spammed - no messages made it on the list), we sent out a simple request for recipients to review their system security and to ask anybody they had forwarded a copy of our messages to to do the same. Within 18 hours, the spam stopped. No subscriber has ever unsubscribed, and even after polling them for what they wanted to have done with the list, most responded that they enjoyed having access to a truly free list and wanted it kept that way.
We originally started the list to build credibility and reputation in the eyes of the market, and to show some of our capabilities, and even though we only recently started spreading word about it, we have attracted some quality readership who are firm supporters (at least of our free work).
Yeah, it would be easy to spam the list silly with ads, sell the subscriber list, and otherwise bleed the readership dry, but that is not ethically or morally justifiable and so long as I control the ethical path of the company, it will never happen.
One argument that is often used to support the nepotism that used to take place in large family-owned companies is that the family had a vested interest in keeping the company solvent, and knew what it took from generation to generation to support and maintain the wealth and health of the company. Never mind that by the third generation things usually went pear shaped, as that generation was far enough removed from the founders who created the wealth so as to not understand what sacrifice and effort was required for the health of the company. Basically, the ethical decisions that created and grew the company in the first place were discarded for short term enjoyment of the wealth.
InfoSec that matters, when it counts.
At a minimum they are the cream of the crop in terms of employee turnover (meaning that they actually want to be there rather than are just doing this until something they really want comes along).
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
Costco's profit comes from money management.
They get net 90 day terms and sell everything within 30 days. That's 60+ days float to invest, collect interest, etc. The "making a profit on selling goods" is almost incidental on top of that.
I've a buddy who used to be banker to Costco - his job was to park a billion dollars or so every night (ok, his bank's & financial systems.) He loved working with Costco, indeed they were one of the few companies he'd considered jumping to, if he was willing to move. He felt their financial people were some of the best, the corporate climate, looking at it from his privileged position, excellent, and their prospects for future growth strong.
Interestingly the clients he used to rail about are pretty much gone or a shadow of what they once were (is Tower Records still around?)
I don't read ACs: If a post isn't worth so much as a nom de plume to its author then I wont bother either.
You're talking $250+ a listing. If they charged that much, people would switch back to classified ads. $25 would be more on target.
By Brian M. Carney needs to think before writing and commenting.
Craigslist is and advertising site. The last think people who are putting up a classified add is and advertiser competing with them. Why would somebody want to place an add, when they know there is going to be a glitzy ad right next to it. For instance, I'm selling a used Dell, do I want to advertise with somebody who is going to have an ad from Dell with a discount price right next to it?
Get real.
If someone is passing you on the right, you are an asshole for driving in the wrong lane.
I haven't ever been to a Costco, but if they sell fresh fruit, either they are taking an ass whipping of a loss on their fruit department or they are marking up much higher than 14%.
Being very familiar with large volume supermarket sales of fresh produce, even with the automatic irrigation systems to attempt to keep fruit extra fresh, the weekly losses in spoiled fruit exceed 14%. And at the same time, a properly run produce department is usually the most profitable department in a supermarket (if the markup is there).
I'm betting that there is a large exclusion list on that 14% markup ceiling.
Actually, I will partially agree with that. One of the very few times I bought extended warranty was on a subwoofer from FS. When the woofer cracked during install (pinched), I brought it back and it was as simple as an over-the-counter exchange, no questions, no problems.
However, I have had many friends purchase computers/laptops from FS, and when they had hardware issues they were always shipped halfway across the country for fixing, and rarely came back fixed (but usually came back with lost data since they were re-imaged). They do seem to have a three-strikes policy though, as on the third return for a defective CD-ROM dock the laptop dock was replaced outright... though I did have to raise somewhat of a stink on behalf of my friend.
Wow. I'm utterly amazed at the irony. What started off as insightfully describing how without focusing on money a great service, while rare, may exist ... degrades into class-warfareism by acting like rich people don't deserve free service. After all, they're rich. They can afford to pay so they should be made to pay more than the average person.
It's ironic to talk of fairness, and then proclaim that rich people should be given discriminating treatment, smacking of socialism.
No sir, I don't buy it.
Global warming is neither science, nor politics. It is a religion.
I believe the quantity they sell leads to less hanging out and going bad. They do not sell "by the pound" like a traditional supermarket as there is no loose produce in bins that you can pick through. Everything is presorted in a box or in a bag. I personally don't know anyone that uses 50lb sacks of softball sized yellow onions but Costco sells palettes of them every day. I think the minimum for bananas is a bag with 3 bunches and they are typicially still very green.
Bad boys rape our young girls but Violet gives willingly.