By Ryan Velez
Craigslist occupies a bit of a unique position in the modern online landscape, serving as one of the last holdovers from the first wave of the dot-com era. Since its humble origins in 1995, the site has grown to become the 46th most visited website in the United State in March 2017 with 59 million unique visitors. Its founder, Craig Newmark, 64, is now an honest-to-goodness billionaire. A recent article from Celebrity Net Worth chronicles the story of Craigslist, and how it managed to remain successful all these years.
Initially, Craigslist was a mailing list of art and technology events around San Francisco. Craig Newmark, who had been laid off from his job at Charles Schwab, created the list as an attempt to “give back” using the money from his severance package to get things started. This investment has now been paid back and then some. According to research from Advanced Interactive Media Group, the site took in $690 million in revenue in 2016. The bulk of this is net profit, and with Craig Newmark as the owner of 42% of the company’s equity, he stands to make plenty. Perhaps what is most impressive is that the service is free for most users, and never had to raise outside investment.
While only a small subset of Craigslist users get charged for posts, these selections are made wisely. These include categories like ticket sales by brokers, New York City apartment listings, and cars sold by dealers. Depending on location, a post can cost $7 to $75. Recently, raising job posting fees in some cities and charging in others for the first time have led to a surge in profits, a 75% growth in revenue from 2015 to 2016. Since professional organizations pay the bulk of these fees, many users don’t understand how this takes place.
Another thing to understand is that its profit margin is massive due to few operating costs. The only thing Craigslist pays for on this end is roughly 50 employees, server costs, and legal bills. Without a need for major expenses or projects, this leads to massive gains for the company, as well as the chance to give back. The company’s charitable arm, the Craigslist Charitable Fund, donated $20 million from 2012 to 2014. At the moment, Newmark is not involved in management decisions but has launched other projects around his interests, including CraigConnects to help veterans and the free press and the Craig Newmark foundation, which has pledged $6 million to journalism-related causes.