Craigslist and its Business Model

Case Code: BSTR340 Case Length: 26 Pages Period: 1995-2009 Pub Date: 2009 Teaching Note: Not Available

Price: Rs.500 Organization: Craigslist, Inc. Industry: Online Classifieds Countries: USA; Global Themes: Business Models, Business Model Innovation, Social Innovation

Abstract Case Intro 1 Case Intro 2 Excerpts

"We are so unlike the other top ten Internet companies. Most of them have tens of thousands of employees. We don't attempt to maximize revenues, hence we don't have sales, marketing, business development teams, or advertising teams. We don't run banner ads or text ads or pop-ups. We have reversed the normal business model. The community of Craigslist is number one. Making money is number two."

- Jim Buckmaster, CEO of Craigslist, Inc. in 2006.

"Craigslist, in terms of its capabilities and so on, leaves a lot to be desired. But it's such a trusted brand and such a widely used site. It's the leader in the general classified segment by some margin. ... All the others, without exception, have better functionality. But Craigslist has the luxury because it's such a widely known and trusted site and so successful. It's sort of thumbed its nose at the user experience and the home-spun elements are part of its appeal. It doesn't appear slick or corporate."

- Greg Sterling, founding principal of Sterling Market Intelligence, in 2007.

"South Carolina joins other states in calling for tighter Craigslist ad scrutiny, which could threaten Craigslist's low-cost, laissez faire business model.

- BusinessWeek, May 8, 2009.

Introduction

In June 2009, Advanced Interactive Media Group LLC (AIM) in its report titled Classified Intelligence Report, claimed that the revenues of US-based Craigslist, Inc., the largest provider of online classified ads, was expected to cross US$ 100 million in 2009.

This represented a 23% growth over the estimated revenue of the company in 2008 and was more than ten-fold the revenues it had generated in 2004. Experts felt that this was no mean feat for a company believed to follow a laissez-faire business model and one that claimed to be a "relatively noncommercial" entity with a "service mission". Founded in 1995 by Craig Newmark (Newmark), Craigslist, based in San Francisco, was an online community featuring free online classified advertisements related to jobs, housing, sales of a variety of products and services, gigs, resumés, and discussion forums.

As of May 2009, Craigslist offered local classifieds and forums for 570 cities in 50 countries worldwide. It generated over 20 billion page views per month and as many as 50 million users visited it each month. These included more than 40 million in the US alone as of March 2009. Craigslist employed 28 staff members. Over one million new job listings were posted on its site each month, making it one of the top job boards in the world. As per the rankings given by Alexa Internet, Inc. (Alexa), Craigslist ranked 24th in the list of the top 500 sites on the web as of May 2009....

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