Tuesday, September 1, 2009

The craigslist Economy

Wired has a great article about Craig Newmark, the creator of craigslist, and his unique business style.

Newmark's claim of almost total disinterest in wealth dovetails with the way craigslist does business. Besides offering nearly all of its features for free, it scorns advertising, refuses investment, ignores design, and does not innovate. Ordinarily, a company that showed such complete disdain for the normal rules of business would be vulnerable to competition, but craigslist has no serious rivals. The glory of the site is its size and its price. But seen from another angle, craigslist is one of the strangest monopolies in history, where customers are locked in by fees set at zero and where the ambiance of neglect is not a way to extract more profit but the expression of a worldview.

The axioms of this worldview are easy to state. "People are good and trustworthy and generally just concerned with getting through the day," Newmark says. If most people are good and their needs are simple, all you have to do to serve them well is build a minimal infrastructure allowing them to get together and work things out for themselves. Any additional features are almost certainly superfluous and could even be damaging.

Businesses are not all working to increase profits by nickel and diming their customers. The playing field is leveled on the internet, and the sites offering the best service at the lowest cost and least hassle rise quickly to the top.

Craigslist and Google have both grabbed majority market share by being simple and unintrusive, providing a good service for free. They could both increase short term revenue by changing their business models, by charging more for services or increasing ad space, but they do not because doing so would drive away loyal clients. It's counterintuitive, but giving consumers a great value at zero cost is actually good business.

Craigslist gets more hits a day than Amazon or Ebay, and is an invaluable resource for everybody, from finding jobs and apartments to selling couches and finding homes for rescued pets, craigslist proves that giving a basic infrastructure to people and staying out of their way, they will not spend all day trying to screw each other as so many on the left believe, but will create a truly valuable community.

Craigslist and Wikipedia are two of the most popular, most valuable sites on the internet, and they are created and policed by their users. They both because people are mostly good, and simply by giving them a platform to meet and exchange goods and ideas without boundaries, we all benefit.

No comments:

Post a Comment