Craig (of the List) looks beyond the Web

Imagine what it might have been like to be Dr. Kleenex. You invent a modern miracle, the cheap paper handkerchief, and suddenly you become the person blamed for America's disposable culture, praised for a more convenient life, or both.

There never was a Dr. Kleenex, though--the product was created by a team of researchers at Kimberly-Clark laboratories in the 1920s. But there is a real Craig in Craigslist, and lately he is looking at life beyond his little list that happens to be the seventh-most-popular Web site in the United States.

It is also a site that is deeply tied up with the fate of newspapers--indeed, many in the newspaper industry blame the site's founder, Craig Newmark, for the downturn in their classified-advertising business.

An ardently no-frills, ad-free, user-sensitive site, Craigslist has, by the estimate of its chief executive, Jim Buckmaster, generated more than 600 million free classified listings. (Though nearly all listings remain free, Craigslist has added modest fees for job listings and real estate brokers in certain big cities, and from those fees the company generates $80 million to $100 million in annual revenue. It has a staff of 25, including Newmark.)

In the United States and beyond, Craigslist is digging even deeper into the classified-ad markets. Once, an announcement that Craigslist was expanding meant adding cities like Miami, Minneapolis, and Philadelphia. These days, it means smaller places like Janesville, Wis., (population: about 60,000) and Farmington, N.M., (roughly 38,000) as well as Cebu in the Philippines and, by Newmark's request, a site for Ramallah on the West Bank.

In the face of this expansion, Newmark is becoming more of a public figure, capitalizing on his success to promote causes that include supporting the Barack Obama campaign and financing investigative journalism--not, he insists, to compensate for any damage Craigslist has done to the newspaper business, which he calls "an urban myth."

Craig Newmark

Sitting in a coffee shop in San Francisco a month ago, explaining his plans in neat mathematical style, Newmark presented an unassuming public presence. He was perched on an ordinary seat, a 6-year-old Prius parked nearby, a Kangol beret on his balding head.

He used to spend two-thirds of his time working on customer service issues (including notifying an Internet service provider about a scammer on the site), he said, and the remaining third on "founder issues," a catchall term he uses for his public-spirited work. That division, he said, would now be half and half.

But before he can extricate himself from customer issues, Newmark will have to resolve some of the growing business and legal complexities that surround Craigslist, a laid-back operation that is bumping into tough-minded competitors.

A Delaware lawsuit accuses him and Buckmaster of boardroom chicanery, an assertion they emphatically deny. Their accuser is the online giant eBay, which became a minority shareholder in 2004, with a stake of roughly 28 percent.

And while officials at Craigslist, including Newmark, maintain that for many years he has not had a significant leadership role there, the eBay lawsuit describes Newmark, in addition to being a large shareholder, as chairman (the board has two members; it had been three).

The suit was set in motion by eBay's decision to introduce a rival online-classified site, Kijiji, in the United States last year. Kijiji is already the market leader in Canada, Germany, Italy, and Taiwan.

eBay's complaint contends that after the Kijiji move, Newmark and Buckmaster plotted in secret to dilute eBay's influence in the company, including an effort to deprive it of its board seat. The lawsuit asks the court to reverse those provisions.

Craigslist is expected to respond to the complaint this month, but on its blog it offered an assessment: "Sadly, we have an uncomfortably conflicted shareholder in our midst, one that is obsessed with dominating online classifieds for the purpose of maximizing its own profits."

The phrase "maximizing its own profits" broadly outlines the fight between the two companies.

Despite its success, Craigslist prides itself on its grass-roots instincts and user-based content--including harnessing its users to identify and block bad actors on the site. Even broad strategic decisions, such as which areas to expand into, are described as reflecting user requests made at online forums at the site.

As the complaint indicated, last year Buckmaster wrote to Meg Whitman, then the chief executive of eBay, saying, "We are no longer comfortable having eBay as a shareholder, and wish to explore options for our repurchase, or for otherwise finding a new home for these shares."

In an e-mail message of its own, eBay stressed that the two companies would remain joined. "We would obviously prefer to see this resolved without litigation," eBay wrote. "With that said, we will only accept a resolution that preserves our rights and the full value of our investment in Craigslist. We will continue to act openly and in good faith as a minority shareholder."

More from News.com on this story's topics

Advertising

Create an email alert | RSS feed

Publishing

RSS feed