Strategic Advocacy as Business Model

The New York Times writes about Craigslist’s contrarian approach:

Jim Buckmaster, the chief executive of Craigslist, is soft-spoken, reserved, minimalist in his rhetoric and demeanor. But his personality is a perfect fit for his company, which aims to provide a no-frills “public service” in an industry filled with overblown claims and intrusive marketing.

Craigslist, based in San Francisco, has attracted acclaim through what Mr. Buckmaster calls its “nerd values.” There is no talk of monetizing eyeballs, maximizing click-throughs or building a backlog of banner ads. Users swap messages, sell goods and services, search for apartments and look for jobs on a bare-bones site that charges no monthly fees, accepts no advertising and uses virtually no graphics.

Craigslist has a simple, unadorned Web site. But that is part of a forward-looking business strategy. Mr. Buckmaster said he reveled in what he called “the ironies of unbranding, demonetizing and noncompeting.” Together, they represent sharp departures from the commercialism on so much of the Web.

Craigslist has an unconventional approach to investing in its “brand”: it doesn’t do anything. “We never even use that word internally,” Mr. Buckmaster said. “We do zero advertising. We don’t have a logo. Now we’re told we have the strongest brand ever for a company our size.”

The company also has a fresh approach to competition: it doesn’t compete. “We have no interest in competing with anyone,” Mr. Buckmaster said. “We’re just trying to create something as useful as possible. Yet we keep reading that we’re one of the newspaper industry’s deadliest competitors” for classified ads.

Above all, Craigslist has a distinctive approach to economics: it keeps finding reasons not to charge customers. It imposes modest fees on companies that post job listings in Los Angeles, San Francisco and New York, and there is talk of charging real estate agents to list apartments in New York. Other than that, the site is free. Yet the company has generated healthy profits on revenue approaching $10 million a year, and eBay recently bought a minority stake.

THAT is the ultimate contradiction of Craigslist, and the power of advocacy as a strategy. Craigslist’s authentically anticommercial values have led to a flourishing commercial property – a company with Web sites in 65 cities, sites that add three million new classified ads a month and get more than a billion page views a month. People involved in several proposed deals said that Craigslist, with just 14 employees, might fetch as much as $100 million if it were put up for sale.

“We’re definitely oddballs in the Internet industry, and we always have been,” Mr. Buckmaster said. “Lots of people made fun of us, especially at the height of the dot-com boom. Most of those people are out of business now.”

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Rajesh Jain

An Entrepreneur based in Mumbai, India.