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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
Perhaps, one that has decided that it doesn't need $500 million?
I know, it hurts my brain too.
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.
* 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
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.
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-
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.
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.
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.
CostCo pays their employees very well for retail and treats their suppliers with respect. In return, their suppliers try hard to keep them as a customer, and CostCo's "shrinkage" (i.e. mostly employee theft) is the lowest in the industry.
Their profits are essentially the annual membership fee. Once you've paid that, you're buying everything pretty much at cost (including those higher salaries.)
They do not advertise and dispense with most of the corporate BS. Which means the customer doesn't have to pay for all of that overhead either.
Totally... In addition to what you said, CostCo treats their employees so well that there are waiting lines to get a job in most areas, whereas there are usually no queues for jobs at Wal-Marts or Targets. I understand that they get good pay and decent benefits compared to most companies, and relative to other retail/wholesalers you wouldn't even think they were in the same business... Plus I've heard that they have a strict seniority system and with that comes vacation benefits and that sort of stuff.
Also, from what I hear, they have what is probably the most liberal return/warranty policy of any company on the planet, though I haven't had a need to exercise that feature.
I'm still cautious of huge "big box" retail chains, but on the whole, I'm pleased with CostCo. They seem to be non-evil and that's good enough for me. Plus, I can buy a5 gallon bucket of pickels without feeling guilty, and damnit, that's the way it should be.
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