Newspapers & Craigslist

As everyone talks about the death of newspapers, i’d like to remark on one of the majors elements in this death spiral: Craigslist.  To me the two major killers of the newspaper are:

  1. Decrease of authority & differentiation
  2. Lack of classified revenue

First, the decrease in authority and differentiation.  Every web site and publication needs to be an authority on something, anything.  Newspapers in the past were authorities for:

  • local news
  • international news
  • sports
  • entertainment

Over the past 8 years, they have no become the authority for only one of those: local news.  International news is dominated by CNN, Reuters and others who focus explicitly on that area.  Similarly, sports is dominated by ESPN and Fox News and Entertainment has a variety of outlets that provide much more in depth coverage and reviews than newspapers ever did.    This decrease in authority minimizes the importance of newspapers to readers.  For most categories listed above, it’s a nice piece of reading material to have but by no means necessary.


The second piece is Craigslist.  In 2000, newspapers pulled in $20 billion in revenue from classifieds. That went to $10 billion in 2008.  So, in 8 years revenues for newspapers got chopped in half (stats here).  Where did this money go, most of those services are now free on Craigslist.   Craigslist took $10 billion out of the industry and pocketed about $100 million of it.  To be exact, Craigslist is pulled in $80 million as of April ’08 (stats).  Who knows what that will be for 2009 but prob at or around $100k.  With a  staff of 28 people so that’s pretty damn good.

Imagine that, a staff of 28 people is decimating an entire industry.  That is the true power of the internet.

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Go narrow and do 1 thing well

I did an interview last night for USC business school where i was asked a lot of questions about Qloud and its beginnings.  Questions like “What advice would you give to aspiring entrepreneurs? What have you learned?”  Well here goes…

i often hear people talk about “doing something big.”  While I admire their desire to change the world, i find it interesting that quite often the companies that do end up changing the world started as small passion projects/startups.  And the business model they find is usually nowhere in sight at the beginning.  Some examples:

  • Facebook started as a Harvard-specific tool to get people to better interact with each other.  After it worked well for Harvard, it expanded to the Ivy’s (and Duke & Stanford), then slowly to other schools and eventually everyone.  That wasn’t it’s original goal.  They just wanted to make it easy for people to hook up – i mean, connect
  • Craigslist started as an email list to share functions, jobs and stuff in San Francisco.  They sat in an office and got emailed tips as to what was going on.  They then added some comments and emailed it out and eventually just posted it to a web site.
  • The Google guys were in grad school and staring at some big servers they had.  One idea they wanted to try was to index the entire web.  Once they did that, they then had to brainstorm as to what they could do.  They never started with the desire to dominate web advertising.  Larry Page Speech
Kathy Sierra at SXSW

This thought of doing something you believe in and are passionate about regardless of the size really hit home for me when i heard Kathy Sierra’s keynote at SXSW this year. She had 16 points on how to make breakthroughs happen.  Point #15 was Don’t mistake narrow for shallow. She pointed at hyper-focused blogs like Passive Aggressive Notes and the “Blog” of “Unnecessary” Quotation Marks as mastering a very tiny sliver of the internet. But you could point to the 3 i mention above (Facebook, Craigslist, and Google) as examples of companies that started narrow and gradually expanded to be game-changers.

When thinking about companies, i think it’s important people try new ideas and things they are passionate about. You’re going to be working 24 hours a day 7 days a week on one idea, so you have to love it. Or as Tim O’Reilly says Work on Stuff That Matters.  It’s clear that startups don’t have all the answers when they begin so at least you can start with something you’re willing to continuously think about.

I was again struck with this thought this morning when i read Clay Shirky’s great post about newspaper and the change they are going through.  He too talks about Craigslist saying:

Imagine, in 1996, asking some net-savvy soul to expound on the potential of craigslist, then a year old and not yet incorporated. The answer you’d almost certainly have gotten would be extrapolation: “Mailing lists can be powerful tools”, “Social effects are intertwining with digital networks”, blah blah blah. What no one would have told you, could have told you, was what actually happened: craiglist became a critical piece of infrastructure. Not the idea of craigslist, or the business model, or even the software driving it. Craigslist itself spread to cover hundreds of cities and has become a part of public consciousness about what is now possible. Experiments are only revealed in retrospect to be turning points.

So, my advice to aspiring entreprenuers is – (a) focus o  something you love; (b) don’t focus on changing the world but rather focus on doing something, one thing, extremely well.  If you execute on those 2 points, it’s easy to expand into something more powerful and profitable.

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