Viewpoint West Partners

Breakfast with craigslist founder Craig Newmark

Just Another Yuppie Drug Deal?
We're in Palo Alto, it's 7:30 am and overcast with low costal fog and a multitude of other early morning atmospherics.  I'm wearing my best sandals and enjoying a Kool Filter King in the open air with some measure of hypnagogic hangover bliss.  I adjust my reflector wraparounds, and we silently continue to search for the hotel room.  No, this isn't a yuppie drug deal, this is the Churchill Club's Breakfast with Craig Newmark, the 'craig' of craiglist.org, that 10 year old overnight internet success story ... 

... But it's Early.  Damn Early ...

... More black coffee, STAT!  A tiny question incessantly chirps in the recesses of my semi-conscious morning mind ... "Does menthol qualify as a food group?" Then another tiny question percolates to the surface ... "What if the caffeine has no significant effect?"  Fear and Loathing in Palo Alto?  Hey, nobody said this was going to be 'pretty' ... but at least we can maintain our professionalism(?)  Well, ok, maybe not ...

3 Questions for Craig Newmark
Mark Calvey from the San Francisco Business Times moderated the event and voiced questions that were quite similar to our prior submissions, so let's just use those for starters since they're handy:

Question 1: Regarding the eBay 2004 transaction, reportedly for a 25% stake in craigslist, what went right and what went wrong?  How has craigslist's mission been affected, if at all?

Answer: Turns out that ebay bought the 25% stake through a former craigslist employee.  What went right was that ebay was considerate enough to consult with Craig before purchasing the shares.  Not sure anything actually went wrong, but hey, it's still early ain't it?  Craig recursively states that the biggest effect of the ebay purchase on craigslist has been that he must repeatedly answer questions on what the biggest effect of the ebay purchase on craigslist has been.  Yeah, this guy was an IBM Java programmer alright ...

Question 2: With craigslist coverage in 45 cities, 1 billion page views per month & 5 million unique visitors (2004), please describe plans for the next phase of growth.  How will eBay be involved?

Answer: craigslist grows city by city, based on community requests and critical mass.  What a remarkably sensible way to manage growth!  Perhaps common sense is a 'disruptive technology' ... It seems like ebay would like to learn more about the dynamics of informal online "flea markets" (craig's own term) like craigslist where more spontaneous social networking just happens.  ebay is also a very sensible company.

Question 3: What types of revenue does craigslist generate (adverts/promotions, listing fees, search fees, etc.) and what are the revenue growth projections/timeframes for these categories? Or, put more tersely, "How do you make money?"

Answer: The craiglist model is simple, instead of using MBA-fabricated business models, they just ask the craigslist community "what is moral to charge for?" and then take heed of the responses.  By using this technique, it seems that craiglist generates tens of millions USD in revenues from job listing fees and real estate broker fees, in multiple U.S. cities.  Difficult to verify this data unless you have access to craigsbooks, but it's hard for any service to stay online for a decade without SOME sort of revenue generating business model instead of just another nasty-ass sock puppet ad campaign ... or the like.

Moral Compass:  IPO?  Just Say No!
The term "moral compass" was used repeatedly, so much so that I began to feel vaguely uncomfortable for no apparent reason ... Ah well, must be the menthol & caffeine combo breakfast ... By moral compass, I believe Craig means integrity and a strong sense of moral values that's part of the company's DNA.  For example, when asked about going IPO, Craig just says no ... why ruin a good thing i.e. lifestyle with the machinations of a public corporation?  Going IPO is not central to the craigslist mission.  Nor are banner ads from Microsoft, for that matter. Instead, Craig is simply trying to instill a sense of community and neighborhood via the Internet.

Nerd Values: Customer Service Representative & Founder
On Craig's business card, his title is "customer service representative & founder."  Craig's basic core values are nerd values: "make enough money to live comfortably, then make a difference" ... to affect social change. 

To that end, he has created craigslist foundation:  a set of resources for other non-profits & a platform for social philantropy, and I'm pretty sure it's open source :-)  "... We produce events and online resources to help grassroots organizations get off the ground and contribute real value to our community ..."

Working the "George Costanza" Thing
During his remarks, Craig compared his appeal to that of Larry David's character, "George Costanza" on the U.S. TV sitcom Seinfeld.  Craig says the "net is about including people" yet also mentions the importance of the "Circle of Trust" within the craigslist community.  To understand this better, you must visit 24hoursofcraigslist.com and make sure you view some trailers.

The Biggest Mistake
Oscar Wilde said something about, "If you want to tell people the truth make them laugh otherwise they'll kill you." So right now, the art Craig is most interested in is comedy. "... It seems to be the only way to tell the truth about politics, that's why the most trusted name in news is John Stewart ..."  And Craig's self-described Biggest Mistake was, "I didn't trust my instincts." 

However, these days it seems like Craig's instincts are just fine ... and he trusts them implicitly.

TAGS
craigslist, Craig Newmark, Churchill Club, ebay

The Churchill Club's Annual "Dinner With Jeff Bezos"

Make Mine A Double
It was a Dark & Stormy Friday night in San Jose and the bourbon was flowing freely in the DoubleTree's Gateway Ballroom, at the Churchill Club's Annual Dinner With Jeff Bezos.  We were greeted at the door with complimentary Woodford Reserve, a fine small-batch Kentucky sipping bourbon from Graham Distillery: Kentucky's "oldest and smallest working distillery."  Very much appreciated and welcomed as JITB, 'just in time bourbon.'

What with the rain and San Jose rush hour traffic, we were a fair bit tardy for the event ... and it was difficult to find a pair of adjacent seats in the crowded ballroom.  But Lupita, the Doubletree's event floor-captain, seated us at the Reserved table for Churchill Club staff and we were quite happy, although anything but reserved.  Julie Crabill from Edelman, (a Daniel J Edelman company and one of the evening's sponsors) and the rest of the Churchill Club staff at our table were quite delightful company ... and my bourbon had just about kicked in when Josh and Jeff began the evening's festivities...

Vicious Dessert Topping?
Business 2.0's editor Josh Quittner started the evening off with a nearly verbatim rendition of one of five questions I had submitted earlier in response to the Churchill Club's open call for participation.  If I had any notion whatsoever that it would've been chosen as the opening question, I would've come up with something better than, "What is Amazon anyway, a Platform, a Brand, or a Dessert Topping?" Geez, and this was considered a vicious question by some?  Hey, it's just my schtick!  Later, Josh would use another question from my personal submission arensal, "What sort of business partnerships is Amazon currently looking for and how can we (Churchill Club members) help?"  Well, here is what I remember of the answers given ... although it might've just been the bourbon buzz ...

Jeff talked about how Amazon is both platform and brand, but maybe not a dessert topping yet, although he did point out his company's penchant to reinvent itself repeatedly over the last (and only) decade of its existence.  Note: a ten year old (or so) Internet company is somewhat analogous to a 100 year old 'old school' corporation ... back then it just took longer to build enough company value to reach the same billion dollar (USD) valuations (that Google has recently achieved, for example) using the so-called 'old fashioned way' ...

Jeff mentioned that although the Amazon brand is strong, it would not be a good idea to open an Amazon-branded "big box" (e.g., a 'Walmart-style' retailing behemoth) using Amazon's distribution centers as a base.  He cited that a lack of big box retailing operational expertise would not put Amazon in a position to effectively capitalize on its brand strengths.  Instead, Amazon's main strength is providing consumers with a qualitatively better shopping experience than what is possible with conventional retailing alternatives.  The Amazon advantage is efficiently offering gigantic on-line selection (over a million on-line titles vs. less than 200,000 in the largest physical bookstore), relevant shopping information, and an integral fulfillment experience second to none; including the recently offered Amazon Prime, a yearly prepaid flat-rate shipping subscription that offers 2 day service.

Laugh And The World Laughs AT You!
Jeff talked a bit about his background, how he grew up on a Texas farm and learned self-reliance at an early age.  "... When something broke, you couldn't just pick up the Yellow Pages ... you had to fix it yourself ..."  He also recounted how his family provided him with early investment seed capital to start Amazon.  When he spoke about his family, he did so with a warmth that was quite tangible, especially when magnified by the big screen projectors flanking the stage.  Jeff's farmer modesty beamed when he spoke about how luck and fortune are linked, and that "... lots of smart people work just as hard (if not harder) and achieve different (i.e. unsuccessful) outcomes ..."  Jeff also made fun of his own laugh, and pointed out that as a teenager, his siblings would refuse to go to the movies with him due to the attention he would attract via his wild guffaws.  Hey, his laugh seems just fine to me!  Comics Credo: ANY Laugh is a GREAT Laugh!

Jeff suggested that the next wave of e-commerce opportunities will be fueled by twin forces: the proliferation of personal computers providing access points into the ever-evolving fabric of "information transparency and perfection", fostered by online web services like Amazon itself.  Jeff illustrated by describing A9 ("... there are nine letters in the word 'Algorithm'..."), Amazon's Palo Alto-based service that is integrating a variety of consumer-centric web services (Google, IMDB, Guru.com, Yellow Pages and more ...) into a comprehensive offering.  Jeff speculated that if more people would use PCs in their kitchen, Amazon's revenues could easily double since that's where a lot of personal time is spent.  He said that even though most analysts predict only a few "big winners in e-commerce" he instead sees many winners and opportunities in providing unique on-line services to consumers.  This is a Win-Win-Win scenario ... and proof positive that Jeff Bezos is a Really Nice Guy.

The Wild Blue Origin
Jeff also mentioned he is currently funding a startup called Blue Origin, a space-based venture not unlike Sir Richard Branson's new space venture, Virgin Galactic.   It's nice to see private space-based investments being made by these successful entrepreneurs.  Hopefully, we will see rapid and timely economic developments in an area that sci-fi fans have just dreamt and read about & longed for ... namely, affordable space travel and transport services.  New and unique opportunities in travel services, communications, and space commerce will be made possible by these billionaire pioneers, all within our current generation!  Indeed, this truly is the most innovative (and speculative) investment area I can think of at the moment ... ah, but I must again defer to the bourbon's wonderful effects on judgement ...  :-)

The evening's session closed with the dreaded 'Philanthropy Question': "Jeff, have you thought about how much money you are going to give away and when?"  At this point, Jeff recounted how he was observing the Bill & Melinda Gates Foundation's activities, and how sometimes their good intentions have been misrepresented and even cast in a rather negative light by some.  He also mentioned his respect for Patty Stonesifer, the Gates Foundation co-president and lauded her for her recent humanitarian efforts with Melinda in Haiti.  Finally, he closed in earnest by revealing that he really hadn't given much thought to philanthropy, all observations aside ...

Banjo Music ...
Let me suggest that we should all 'stay tuned' to Jeff Bezos: A Really Nice Guy  ... even if he did graduate summa cum laude in computer science and electrical engineering from Princeton and was Time Magazine's 1999 Person of the Year.  (Kidding, really!)

Let me also advise that bourbon, especially bourbon from Kentucky's oldest and smallest working distillery, can become an exquisitely bad habit.  But Bourbon has a wonderful effect on the literary arts, however, both for a readin' ana writin' ... somebody better hand me a dang banjo, a right quick now!

TAGS
Amazon, Jeff Bezos, Josh Quittner, Churchill Club, A9