How Craig Built a Billion-Dollar Company From an Email List
The marvellous story of Craigslist
It’s 1995. The internet was beginning to find its feet and a clever chap started noticing something quite interesting. He realised that people began helping each other over the internet just like they would in real life. As a newcomer to the San Fransico scene, Craig wanted to create that sense of community to the Bay Area. He wanted to find people just like himself.
That simple idea began in 1995 as nothing more than an email list. It was a list that was initially sent out to friends and family about what was going on in the Bay Area. Social events that were of interest to software engineers, just like Newmark.
What initially began as a simple list of events grew, as more people joined the list, the requirements of the list expanded. People began posting job advertisements which eventually made way for the job section on the site. Similarly, people started to question where the interface was, where could they find all this information? Well, they couldn’t. That was, not until Newmark created a website for it in 1996. The site continued to grow in subscribers and in demands, which meant that by 2000 Craig had nine people working for him and he was able to quit his job.
Over the coming years, the site would continue its upward trajectory and its exponential growth meant that today Craig Newmark list is now worth an estimated $3 billion.
Craiglist started from a simple, humble email.
Spot the Problem
Newmark spotted a problem — a very simple problem. People who were interested in software development didn’t know where the local social events in the San Fransisco area. Talk about a niche.
How did Craig know this was a problem? Well, he happened to be a software engineer, living in the local area. As a young man working software development in the Bay Area, he had no idea of what events were going on to help him connect with likeminded folk. He did, however, know that the Bay area was a hub for software developers, so he knew these events were happening.
The problem was that no one knew about them.
We often fall into the trap of thinking that the problems we need to solve have to be hugely complicated or so complex that no one else has thought of them. Craig put that theory to bed. Your problem doesn’t have to be convoluted, difficult, or even hard to solve. It just needs to be a problem.
You can often spot a problem by looking at what frustrates you.
Is there something you’ve been looking for and you just can’t seem to find it?
Have you searched far and wide for a service that specialises in something that you are interested in, yet you just can’t seem to find the perfect fit?
Are you constantly getting frustrated because you spend time doing something that you know could be made simpler?
All our frustrations are evidence of a problem yet to be solved. That problem doesn’t have to be huge, it just needs to be a problem. Some problems are simple and some are complex, it doesn’t really matter the size or the complexity, it just needs to be something that is causing you a bit of a headache.
Keep your eyes peeled for things that people are complaining about, often they are problems waiting to be solved.
Be the Right Person to Solve the Problem
Often you will find that if something frustrates you then two things will be true:
If it frustrates you, chances are, it frustrates other people, they just haven’t done anything about it.
If you have the pain of being frustrated by it, you know what it feels like, so you are the best person to solve it.
Often the simplest problems are the clearest to solve but we spend all our time thinking other people are already solving them. Don’t wait for it to be solved. If you want to solve it, get solving.
Was Craig the best person to solve the software development local event miscommunication problem in the Bay Area in 1995? Yes, he absolutely was.
When you have experience being on the other end of the problem, you know what kind of solution you need. You are empathetic to the other consumers feeling the pain of this problem because, well, you’ve been there, you get it. As a result, you are a lot more attuned to what consumers want. You know what works and what doesn’t work. You have accidentally been researching what consumers want by being a consumer and wanting something.
It means that like Craig, you are able to understand exactly what is necessary to solve the problem. If you are the person experiencing the problem, you are best placed to solve it.
Craiglist: Solve It Simply — No Bells, No Whistles
You could easily fall into the trap of thinking that you need to spend a big lump sum, remortgage your house, and/or quit your job in order to solve this newfound problem of yours. You can’t possibly comprehend the idea you could spend a small amount of money, not risk total financial destruction and maybe not give up the career you’ve worked quite hard to establish over the last 20 years.
But you can.
You don’t need to quit. You don’t need to risk your life savings. You don’t really need to risk much at all.
Most ideas just need time. They don’t need a tonne of money throwing at them rather, they need your attention. They’re like a newborn baby. They don’t care if you shower them with gifts in the early days, they won’t learn much from a kitted-out cot or a pushchair that has all the bells and whistles. They will, though, learn an incredible amount from you if you put the time into them.
Your idea needs time, thought and care put into it. Now, that doesn’t mean you need to hand in your notice tomorrow to give it every second of your time. Much like a newborn, an idea tends to sleep a lot. It needs time to sit, to grow. You need time away from it so you can come back to it and look at it in a new light. That can easily be done on a weekend and around your nine-to-five.
How long would it take to build an email list? How much time (and honest time, not time procrastinating) would it really take to write a list of events happening in the local area? Not a huge amount I can’t imagine. You’ve probably got 60 hours outside of working time to work on your idea.
You’re telling me you can’t change the world with 60 hours a week, every week, for years?
Of course you can.
In the product development world, we would call this a minimum viable product. Enough features to satisfy early customers experiencing your problem. For Craig, that was an email list — what is it for you?
Don’t chuck in your day job, don’t remortgage your house, and definitely don’t invest your life savings. Start with a simple solution to your problem.
Listen to Your True Fans From Craiglist
Along the way, there will be people that absolutely love what you are doing. They will tune to what you are doing and importantly they will be a key part of your journey. Those are the people that can help you grow in the right direction — if you listen to them.
Just like Craig’s true fans were helping him by asking about a website and giving recommendations for categories, your true fans will help steer your ship. You should listen to these folk because they are the ones that are engaged in what you are doing, these are the people that need your service the most.
When you start something new, it’s easy to fantasize about what the end goal is. You start to theorise about a fancy website, a home delivery service, and huge headquarters in some up and coming city centre. What you tend to forget is something quite obvious, so you don’t ask the question:
Is this what my customers want?
Craig found that by listening to his consumers and solving problems along the way, the path to success created itself. In the early days, Craig introduced job postings to the website.
“One former Craigslist employee, who spoke to Forbes on condition of anonymity, said that fees were initially introduced to counter spammers in particularly competitive categories, like New York City apartment rentals.” — Forbes
Customers told Craig they wanted somewhere to post their jobs. That created a new area to explore for the company. They then told Craig that there were people spamming the site, which was causing customer dissatisfaction. Craig introduced fees. That got rid of the spammers and created a new revenue source in the process.
This tiny bit of innovation led to Craigslist making $40,000 a day in job advertisements alone in the early 2000s.
You might not always know what’s around the corner, that’s the exciting part. Keep your ears to the ground, spot the problems as they arise, and solve them.
Stay True to Your Roots
“One could argue that Craig Newmark, with his simple-minded stubbornness and refusal to innovate, made himself billions. The guy has to be banking $400 million a year.” — Jeremy Levine, Forbes
If you search Craigslist today, your first thoughts won’t be that this website makes a substantial amount of money every year. My first thoughts were something along the lines of “where on Earth do I start here?”
But that is the beauty of Craigslist. It’s stuck true to what it was all those years ago. The company is very clear on the problem it’s solving, it knows who its true fans are, and it doesn’t steer too far away from its main objective.
That technique has proven to be incredibly profitable over the years. Craiglist is now worth an estimated $3 billion dollars.
A Final Thought From Craigslist
An email list seems like part of the business model these days. It feels as though everyone has an emailing list and that is part of a bigger plan to get customers to land on a business page to buy products or invest in a service.
Craig flips that model on its head. His whole product was an emailing list. Nothing more, nothing less. He executed this service well and then as it grew, he listened to his customers and pivoted into the areas that they wanted. That then led to more revenue streams, higher profit margins, and more customers.
No fancy website. No shiny headquarters.
Spot the problem. Solve the problem simply. Listen to the customer and adapt.
Today, the company employs around 40 workers. According to Forbes, the site receives over 50 billion page views per month and earns $690 million in revenue.
Not bad for what started out as an emailing list.