
How Craigslist Makes Money - sytelus
https://www.forbes.com/sites/ryanmac/2017/05/03/how-does-craigslist-make-money/
======
madamelic
I think they are doing it right.

Just find a niche and work at it progressively through life. No need to raise
$100M D Rounds, no need to have an explosive exit, whatever.

I think it would be nice to just steadily have six figures, work on something
I love and live life (a la Basecamp). Most of all: Have complete control of
your destiny. No investors, no bosses, etc.

~~~
colmvp
I know hindsight is 20/20, but it's interesting to me that they could've
created Airbnb, as they had both the reach and finances to potentially create
a side-project that was specific to short-term rentals. They already had
sublets and temporary rentals as a sub-listing since forever.

I know that Airbnb comes across as warm and fuzzy hosts who engage with
guests, but it's progressively more commercialized with a good portion of
hosts either managing multiple short-term rental properties or dedicating a
space specifically for the purposes of consistently having short-term rentals.

~~~
smelendez
That would have completely changed the company, though. Airbnb works by
introducing ratings, insurance and being an intermediary someone can at least
theoretically call if a renter is crazy or the listing isn't as advertised.

Craigslist has 50 employees and minimal vetting of anything. It's great for
what it is, but I would never use it to rent anything​ site unseen.

~~~
cgriswald
> Craigslist has 50 employees and minimal vetting of anything. It's great for
> what it is, but I would never use it to rent anything​ site unseen.

This is one reality show I would watch. Forget all those "We sleep in a dark
place recording all the sounds buildings make and then speculate wildly about
causes" shows. Sleeping overnight in a house/room/whatever rented randomly off
Craigslist would be way more interesting and probably frequently more
frightening.

~~~
jayjay71
I hope someone reads this and makes it a reality.

~~~
narrowrail
Thinking about this a bit more, I think it would have to be a show where the
hosts were in on it. The scam artists would learn of this show if it became
popular, and avoid renting to folks seemingly associated with it.

A format like "Diner's, Drive'ins and Dives" would make sense with personal
tours, instead of these 'virtual tours' found on VRBO (now owned by Expedia)
and AirBnB.

Anything too dramatic won't scale, or it will be fake (like most 'reality'
tv).

Edit: I guess one could do it surreptitiously, and save up the content, only
to slowly release it ("maximizing revenue"). This might come across as "hit-
piece journalism" funded by the AirBnB and VRBO. Change the cast of the show
so they are not known associates of the show before the content is made
public.

------
reducesuffering
Craiglist, because of its age, is interestingly built on Perl[1] and four
years ago brought on Perl's founder, Larry Wall.[2]

[1]
[https://www.craigslist.org/about/thanks](https://www.craigslist.org/about/thanks)
(CL tech stack) [2] [http://blog.craigslist.org/2013/10/15/artist-formerly-
known/](http://blog.craigslist.org/2013/10/15/artist-formerly-known/)

~~~
derefr
Craigslist are so quiet about their tech; I'm surprised there's even that
much. I'd love to hear their opinions on operating some of those things at
scale, given that their problems are likely much more like those of the
average CRUD-y SaaS business (scaled up) than they are like those of e.g.
Twitter or Facebook, who have to care about things like "realtime demand-based
geographic read-only partial replication of event streams."

~~~
ouid
I believe this based on a thing I _think_ I read a long time ago, but isn't
all of CL's tech focused solely on preventing any indexing of the site? It's
no wonder they would keep it quiet.

~~~
derefr
I would _like_ to believe this, but given the amount of spam that gets posted
to CL—and given how well a sophisticated, heuristic anti-indexing WAF would
block spambot request traffic as a simple side-effect—I find the idea a bit
dubious.

~~~
dismantlethesun
A lot of spam on CL isn't created by bots, but by human beings.

As little as 3 years ago, I knew people who'd make job ads on elance asking
someone to 'automate' their craigslist renewals and postings.

------
djsumdog
I remember looking up this exact question a few days ago. I really prefer to
sell things like used electronics on Craigslist over eBay.

I really like their business model too. They made enough to keep going, but
not enough that they aspire to take over everything. It's a really simple
concept, and there are very few business ideas that can pull it off.

~~~
harlanji
> It's a really simple concept, and there are very few business ideas that can
> pull it off.

The vast majority of businesses bootstrap themselves. Not on HN of course :)

~~~
derefr
I think the GP was right—there are very few business _ideas_ that can pull off
bootstrapping. The space of business _ideas_ executable with funding is a
superset of (and probably much larger than) the space of business ideas
executable without funding.

Also, most of the ideas you can only execute with funding are such because
they'll never make any money. ;)

The majority of all successful businesses, meanwhile, operate off a very small
sub-space of the space of all business _ideas_. The part of the space called
"workable business _models_."

I'd agree that if you look at the space of workable business _models_ ,
probably the majority of them are either bootstrap-friendly, or common and
low-risk enough that regular consumer banks are willing to finance them with
debt-capital (i.e. "business loans".)

------
wand3r
I was wondering how they got that number; basically they use a $690M revenue
guess from a third party, apply a valuation multiple from eBay and then
multiply by the 42% Newmark owns.

Craigslist is unique; it isn't entirely profit driven and as far as Alexa 1000
sites; it might have stayed closest to it's original founding philosophy. I am
not sure how they make money; iirc it was only a few select markets and select
offerings like realestate. Costs are probably the lowest out of a site that
size.

Awesome product; seemingly great philosophy; Newmark was early but he was
principled and to that Craigslist owes much of it's success

~~~
gwern
> I was wondering how they got that number; basically they use a $690M revenue
> guess from a third party, apply a valuation multiple from eBay and then
> multiply by the 42% Newmark owns.

It's not that dubious. The methodology is as simple and straightforward as it
gets:

> AIM's Zollman, who called his company's Craigslist revenue estimate
> "conservative," said the AIM Group counts up listings for each category in
> various markets and then multiplies that by the known fee associated with
> that listing. (Fees can range from $7 to $75 per posting, depending on
> location.)...As the founder of 3Taps, Kidd built an interface for
> programmers that pulled classifieds data from Craigslist and was able get an
> accurate picture of the total number of listings on the site. He published a
> 2011 white paper that pegged Craigslist's annual revenue at $300 million, a
> number he said has certainly risen as Craigslist has increased or rolled out
> more fees.

This is hard to screw up, and if anything, counting listings ought to be a
drastic underestimate - crawls of a hostile large high-turnover website will
be incomplete, and Craigslist has other potential revenue sources like selling
feed data to hedge funds or real estate or HR agencies.

This makes it all very puzzling. As the quoted employee says:

> "Eventually we realized we were making a lot of money and it was more than
> we needed to just cover costs," the employee said, noting at one point in
> the early 2000s Craigslist was making $40,000 a day on Bay Area jobs ads
> alone. "We could all do the math, and we'd wonder where all the money would
> go."

So CL is making at a bare minimum $300 million a year by 2017, of which a
large fraction is profit; the few employees say there are no major capital
investments a la Amazon (and no one has ever pointed to major software or
hardware investments attributed to Craigslist that I've ever seen), and you
never hear of Craigslist billionaires or millionaires aside from Newmark, so
the profit isn't simply being spent on datacenters or employee stock
compensation; thus, around half would go to Newmark if it's distributed as
dividends, so he could have an income of easily >$50m a year over the past 7
years after taxes or >$350m on top of whatever he earned before 2011 on that
increasing revenue. The Craigslist Charitable Fund is disbursing $10m/year or
less (and donations to that wouldn't be taxed), so that leaves >$300m (7 *
50-10). But Newmark claims to be worth much less than $400m total. So... where
does it all _go_?

It's hard to see how two different groups counting listings could be high by
an order of magnitude, what Craigslist could be spending it on, or what
Newmark is spending it on, unless he's making huge anonymous donations every
year through other nonprofits (but why avoid his own CCF?) or simply lying
(for privacy to avoid the attention or maintain his self-image, or just in
order to make look bad "a fake market intelligence group who I won’t name").

~~~
wand3r
I agree; and didn't say it was dubious. That said; the title was phrased with
a slight negative connotation; before it was changed it was like:

 _Newmark was an idealist; now he 's a billionaire_

He is likely a _paper_ billionaire but the article didn't really prove _to me_
he's less of an idealist not that he would sell; making that figure
hypothetical.

Sure he's rich; but he could be much more so and the reason is ethics and
idealism. So too me; I think saying the company is worth x; and he owns most
of it fails to consider he likely wouldn't sell and has built a profitable
business users love while remaining humble and ignoring greed

Edit: I know of one large anonymous donation he has made personally and I an
nowhere near connected or know anyone that knows him personally

------
pkamb
> 25\. A Craigslist competitor. Craiglist is ambivalent about being a
> business. This is both a strength and a weakness. If you focus on the areas
> where it's a weakness, you may find there are better ways to solve some of
> the problems Craigslist solves.

[http://old.ycombinator.com/ideas.html](http://old.ycombinator.com/ideas.html)

~~~
sillysaurus3
Remarkably prescient for 2008.

 _1\. A cure for the disease of which the RIAA is a symptom. Something is
broken when Sony and Universal are suing children. Actually, at least two
things are broken: the software that file sharers use, and the record labels '
business model. The current situation can't be the final answer._

 _8\. Dating. Current dating sites are not the last word. Better ones will
appear. But anyone who wants to start a dating startup has to answer two
questions: in addition to the usual question about how you 're going to
approach dating differently, you have to answer the even more important
question of how to overcome the huge chicken and egg problem every dating site
faces. A site like Reddit is interesting when there are only 20 users. But no
one wants to use a dating site with only 20 users—which of course becomes a
self-perpetuating problem. So if you want to do a dating startup, don't focus
on the novel take on dating that you're going to offer. That's the easy half.
Focus on novel ways to get around the chicken and egg problem._

Tinder launched in 2012.

 _17\. New payment methods. There are almost certainly things whose growth is
held back because there 's no way to charge for them._

Bitcoin.

~~~
placeybordeaux
w.r.t bitcoin being the new payment method, so far bitcoin hasn't enabled the
really game changing thing: frictionless micropayments. It's possible that
lighting networks will enable this (load up your browser with 5 bucks and lock
that up in a connection to the LN, pay for articles then pay 1 cent to skip
ads, buy premium features one at a time etc), but we haven't seen this yet.

~~~
Frondo
Having read the Scott McCloud book that focused on micropayments almost 20
years ago, and having seen so very many people try something and have it go
nowhere, I've come to the conclusion that micropayments are simply never going
to be a thing.

My guess is, at the end of the day, people don't want to think about money
transactions when doing ordinary things. You know that word "gamify"? Adding
badges and shit to things to make tedious things "fun"? Micropayments do the
opposite. Transactifying your ordinary processes makes them _less_ fun because
you're constantly thinking about spending money. It just adds friction, even
just cognitive friction, when everything we do is about reducing it.

I think this is also why Patreon is taking off. People don't think about
paying a penny to read a single comic, they just toss a few bucks at a comic
artist each month.

~~~
placeybordeaux
What do you think about non-human actors interacting through micropayments?
Either your computer acting in your interests with a small sum of money, or
autonomous agents that live through a couple hours of compute at the cheapest
price & keep their own wallet.

------
ry_ry
Craigslist is ubiquitous in its niche, but i never really engaged with it
beyond having a laugh at the occasional Craigslist meme post that worked it's
way into the internet at large.

At the same time, for years now I've been banging on to any of my industry
friends about how global social networks are an internet anachronism and that
local networks are the future.

It's only just dawned on me that my misplaced futurism was simply describing a
very successful long term business. A billion dollars later, it turns out
Craigslist isn't niche at all - my thinking was.

------
quickConclusion
I often wish Facebook would have followed that approach. They made money very
early with small ads on a lots of page views, did not need investors.

But they went into the VC religion of revenue growth, took their money, then
Wall Street money, and they cannot go back now because all employees and
stockholders have been promised more. So more ads, more snooping on users,
more worldwide control, we need to feed the beast.

Zuckerberg could have continued managing it a-la Craigslist, and still make a
few billion for himself. We would all feel much better about using FB.

~~~
acdha
Facebook is at least successful at that: Twitter jeopardized their core
business, took on huge operating costs, and is struggling to pay for it
despite making what would otherwise have been a quite successful revenue
stream.

------
ChuckMcM
I found it useful that they could use spam as a signal for what to monetize.
When doing Blekko (search engine) we noticed that spam was a solid indicator
of the search categories that made the most money.

------
ouid
If Craigslist makes ~600M in _profit_ , Why the hell is Forbes giving them a
valuation of 3B? That's a Price to Earnings ratio of 5. That's not
conservative, that's insane. Am I missing something?

~~~
debacle
For companies that aren't going to eat the world, only exist on the network
effect, and are happy in their space, a P/E of 5 is reasonable. How much would
you pay to buy craigslist?

~~~
eanzenberg
At least 10x their yearly profit? What other investment provides a consistent
10% yearly return on the scale we're talking about?

At P/E ratio of 5, you literally just wait 5 years and you've just made as
much as your initial investment.

~~~
AnimalMuppet
If you get five years before someone disrupts it. That's not a given.

~~~
accountyaccount
Given craigslist has been around for 20 years I think it's fair to assume they
could take an upwards of 5 years to unseat. Even Myspace continues on to this
day.

------
iamatworknow
>It also charges fees to list postings in categories including ... automobiles
offered by dealers

This was a huge thing in my industry. I work with a lot of independent car
dealers that used to list everything on their lots with Craigslist, then they
started charging the dealers $5 a pop and many of them just quit using it.

There are too many other car listing sites out there now that offer more than
just an ad (vehicle reports like Carfax, market trends, valuation, et cetera),
so Craigslist just wasn't worth the cost to them.

~~~
coredog64
I'm happier for it, as otherwise you wind up with garbage ads from the smaller
lots. For example, they'll list the monthly payment instead of the price,
which makes wading through 'sort by increasing price' a PITA. Or they'll put a
bunch of SEO keywords into the ad such that their vehicle shows up on a search
that it shouldn't.

~~~
Declanomous
Not to mention the places that post the same ad every day or even more
frequently.

Hmm, I'm interested in a Subaru. (I search Subaru) _500 listings of the same
BMW x5 come up._

Nevermind, let's see what Hondas are on the market. _500 listings of the same
BMW x5 come up._

 _I throw my computer out the window._

~~~
Neliquat
Yup, if i search for 'honda' i have to throw in '-nissan -ford -financing
-credit' or some abomination to actually get results, and flag whats left.

------
6502nerdface
> At 64, Newmark has long said that he is not involved in management decisions
> at Craigslist, though he still continues to do customer service.

I'm kind of curious what this means at a 50-person company. Is he still
handling routine support tickets just for the love of it?

~~~
mcherm
> Is he still handling routine support tickets just for the love of it?

I've always understood that this is PRECISELY what he is doing. I hope it's
true.

------
Animats
How's Wales doing with Wikia? That was his attempt to monetize the Wikipedia
concept. It ended up as a huge repository for fancruft. Does it make serious
money?

~~~
bostonvaulter2
Ugh, wikia has so many ads. Super annoying, especially when it's the only
source of the content that you're interested in.

------
pascalxus
just look at how successful a business that is, so simple, so little
innovation and yet so much revenue. But despite all that, they have the best
feature (X factor) in the wolrd: market timing.

ohhh what i wouldn't do, to time travel back to 1995.

~~~
jzawodn
What's innovation have to do with it? Sounds like someone has convinced you
that things have to work a certain way and you've found your first counter
example...

~~~
pascalxus
It's a broadly held belief by many. It's good to look at craigslist to see how
simple solutions are all that's necessary. Any yet, too frequently, we see
companies spending soooo much money on useless features and so called
innovations that don't help them solve their problem. This happens for both
failing companies and very successful ones too. It can be difficult to
isolate, exactly why something works, when you have so many confounding
factors.

------
brndn
Why doesn't Craigslist have mobile apps?

~~~
dammitcoetzee
Craigslist is one of the best pages on the internet. It's functional, it loads
fast, it doesn't have a stack built of buzzwords and bullshit. It works on
every device everywhere. I mean, what business does a page have being
megabytes and megabytes if it's gonna display a couple bytes of text? None. It
doesn't matter if it's "technically free" these days, that's just bad design
and engineering.

~~~
sytelus
Craiglist design actually sucks. When I first used it, the whole thing was
almost revolting from design perspective. Where some people see simplicity,
others see utter lack of modernity, friendliness and affordability. I still
can't get some of my relative to use it (they ask me to post on their
behalf!). Before you cite page counts, revenues and unique users, think about
how many people are _not_ using it despite the fact everyone has heard about
it and everyone has a need to sell something on and off. Amazon UX is almost
complete opposite of craiglist but is usable by much much wider audience.

~~~
trowawee
I mean, we can't prove who "isn't" using it. We can prove that millions and
millions of people are using it and seem to be content with it; we can provide
anecdotal accounts (including by many people in this thread) that the
simplicity and straightforwardness and consistency is what brings them back to
the site. I can tell you that everyone I know looks at Craigslist when they're
looking for apartments. But I get that you don't like it; I just think you
need to acknowledge that's a preference, rather than an objective fact.

------
marcusjt
The very first sentence of the article - "On March 1, 1995, fired off an email
to his friends." \- is not a valid sentence, it's missing the subject!
_facepalm_

~~~
marcusjt
Aha, I was viewing it at
[https://outline.com/xX7xe3](https://outline.com/xX7xe3) but in fact his name
IS present and hyperlinked in the original article, so it's Outline.com that's
at fault.

UPDATE: I've reported the issue to Outline.com

------
Fluid_Mechanics
Great service for selling used electronics, renting out an apartment, or
sucking a strange man's penis.

~~~
nathanvanfleet
I guess that explains your username.

------
troncheadle
Forbes is unequivocally the worst website I have the displeasure of being
linked to on a regular basis. Readability is quickly approaching 0. This page
kept hijacking my scroll thru the article to keep an ad at the top of my
window. Horrible, horrible, horrible.

~~~
metaphor
I honestly don't even bother anymore:

[https://outline.com/xX7xe3](https://outline.com/xX7xe3)

~~~
circadiam
Pro-tip:

Add outline.com/ to the front of the article's URL. Much faster and works
nicely on mobile.

~~~
intrasight
Thank you!

------
miguelrochefort
Craigslist has one of the worst UX. How come has it not been improved in
years?

Why doesn't Craigslist get any competition? It should be trivial to implement
something that's 10 times better...

~~~
douche
When I hard reload the Craigslist home page for my state, it downloads right
around 150 kb.

That is a thing of beauty.

~~~
phkahler
>> When I hard reload the Craigslist home page for my state, it downloads
right around 150 kb.

>> That is a thing of beauty.

I really find it sad that it's such an anomaly.

~~~
bpicolo
Text-only content does not make a ton of sense for a whole lot of websites.

~~~
phkahler
A few graphics shouldn't cause much bloat, and there is way too much JS out
there today. IMHO of course.

~~~
bpicolo
> and there is way too much JS out there today

Heh, well unfortunately the web doesn't get much in the way of alternative : (

